This Mortgage Required Income Calculator helps you determine how much income you need to qualify for a mortgage of a given amount and interest rate. This calculator also has features that allow you to take into account factors such as taxes and insurance, and the monthly debt loads of both you and a co-borrower.

Calculating the Income Required for a Mortgage

You've found a house. You've fallen in love with it. You know the price. But do you earn enough to be able to buy it?

Or maybe you're a renter looking to become a homeowner. You know the price range of starter homes in your area, but you're just starting out on your career and don't earn much money yet. How much income will you need before you can buy a home and how does that affect your plans going forward?

This Mortgage Required Income Calculator lets you figure out just how much income you need to be able to qualify for a mortgage of a certain amount. The calculator also shows how the required income would vary across a range of mortgage rates, as that affects your monthly payment.

Your monthly debt load also affects how much income you need to qualify for a mortgage, so the calculator has a feature that lets both you and a co-borrower enter how much you're paying each month for auto loans, credit cards, student loans, child support, etc. and takes that into account when figuring the income required for a mortgage.

Using the Required Income Calculator

Begin by entering the desired loan amount, expected mortgage rate and length of the loan in the spaces provided. As you do, you'll notice that the required income and a calculation of the monthly mortgage payment immediately appear in the blue box at the top of the calculator

Note that the loan amount and interest rate can be adjusted by using the sliding indicators; left-click and hold on the green triangles to adjust the figures. As you do, the required income level and monthly mortgage payment will change as well.

The calculator also lets you enter information for monthly debt liabilities and housing expenses, and to view how the required income would vary across a range of interest rates. These sections may be displayed or hidden by using the plus (+) or minus (-) symbols at the right side of the column.

Monthly liabilities

This is where you would enter figures for the minimum monthly payments you must make for such things as auto loans, credit cards, student loans, child support and other obligations. Enter the minimum that is required and not any higher amount you might voluntarily make.

Enter the same information for your co-borrower, if there is one and the two of you have separate liabilities.

 Note that these are for debts and other payments you are legally required to make; don't enter such things as utility payments, cable or satellite TV, Internet service or other recurring expenses.

Just as with the loan amount and interest rate, you can adjust these figures using the sliding triangles and the required income and monthly loan payments in the blue box will change immediately.

Housing expenses

These are the costs that are typically billed as part of your monthly mortgage payment: property taxes, homeowner's insurance, homeowner's association fees or dues, and private mortgage insurance (PMI). Use the worksheet indicated to enter estimates for those figures.

You will only need to enter figures for homeowner's association fees if you are planning to buy a condominium, co-op, a home in a planned unit development or similar cooperative arrangement. You will only need to pay for PMI if you make a down payment of less than 20 percent of the home's value. 

 

Required annual income for a variety of interest rates

This feature simply displays how the income required for a home loan of a certain amount varies across a range of interest rates. The lowest rate displayed is the rate you entered at the top of the page.

 

Notes on using the Required Income Calculator

The calculator provides a standard calculation of the income needed to obtain a mortgage of a certain amount based on common industry guidelines. These guidelines assume that your mortgage payments, including taxes, insurance, association fees and PMI, should be no greater than 28 percent of your monthly gross income.

In addition, these guidelines assume that your mortgage payment and other monthly debt obligations combined should not exceed 36 percent of your monthly gross income.

Those are the base guidelines; however, borrowers with excellent credit and healthy financial reserves can often exceed those guidelines, going as high as 41 percent of gross monthly income for mortgage payments and debt obligations combined.  You may wish to take that into account when considering your own situation.

 Interested in what rate you could get?

Click HERE to compare mortgage rates or use the "Get Free Quote" button to get personalized mortgage rate quotes from top lenders in our network.

 

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