Mortgage Prequalification Calculator

See how much home you can afford to help narrow your search.

Buying a home is an exciting time, but it can also be overwhelming as you look for the perfect home to fit your needs. One step that can be beneficial is to prequalify for your loan, so you know how much house you can afford.

It’s always a good idea to get prequalified with a mortgage lender before you start shopping for the home you want. But if you want to start house-hunting and aren’t quite ready to contact a lender, you can prequalify yourself.

How to prequalify to buy a home

This free home loan prequalification calculator can help you prequalify on your own before you contact a lender.

It will tell you how much home you can afford to buy, given your current income and monthly debt payments. It will also tell you how much money you’ll need for the down payment, based on the type of financing you plan to get.

Please keep in mind that this calculator is intended for research purposes only. This does not serve for any official mortgage prequalification. You will need to contact a mortgage lender to prequalify for a home loan.

The prequalification that you receive from a lender may differ from this estimate based on the lender’s requirements for loan approval. Your lender will also be able to help you understand how taxes and insurance will affect monthly mortgage payments in your local area.

Overcoming common challenges to qualify for a mortgage

The three most common barriers to homeownership are:

  1. Low credit score
  2. Too much existing debt
  3. Insufficient income

If you get rejected for a mortgage based on any of these three factors, it may feel like all is lost. However, it may be possible to overcome these challenges, often in less time than you might think.

Overcoming the challenge of a low credit score

In general, you want the highest credit score possible when you apply for a mortgage. That will help you get a low interest rate, which saves you money over the life of your loan. At a minimum, you usually need a FICO score of 620 or higher to qualify for a traditional fixed-rate mortgage.

However, if you are applying for an FHA loan, you can qualify with a much lower score. If you plan on having a 3.5% down payment, you can qualify with a FICO of 580 or above. In addition, if you can put 10% down, then you can have a score as low as 500.[1]

Important note about putting less than 20% down

If you put less than 20% down on a mortgage, your mortgage lender will require you to pay Private Mortgage Insurance (PMI) each month on your mortgage until you pay off 20% of the value of your home. PMI is special insurance that lenders apply when your Loan-to-Value Ratio is less than 80%.

Once you pay off 20% of your home’s value to get below 80% LTV, you will no longer need to pay PMI. Your monthly payments would be reduced.

Addressing challenges with too much existing debt

In order to qualify for a mortgage with most lenders, you need a debt-to-income ratio of 41% or less with your new mortgage payments factored in. Some lenders will approve you if you have a DTI of 45% or less.

This means that existing debts like auto loans, credit cards, and student loans can prevent you from getting approved. It’s a good idea to check your DTI before you apply for a mortgage to make sure you won’t get rejected because of too much debt.

What to do if you have insufficient income

Insufficient income can be an issue for two reasons:

  1. If your income is low, you have a lower threshold to meet the debt-to-income ratio that you need to qualify for a home loan.
  2. It makes it challenging to generate the money you need to cover your down payment and closing costs.

For the first challenge, reducing debt is often a good way to address the issue so you can qualify for a mortgage. Eliminating credit card bills and other obligations will free up money in your budget to cover mortgage payments.

For the second challenge, there are programs that make it easier to generate the funds you need to cover the upfront costs of buying a home. First, FHA loans have a lower down payment requirement. You can qualify with a down payment as low as 3.5% if you have a FICO of 580 or higher.

There are also programs specifically designed to help first-time homebuyers cover upfront costs. Down payment and closing cost assistance programs can be invaluable to help you cover costs so you can become a homeowner.

So, if this is your first time buying a home, you simply need to take a HUD-approved homebuyer course. This will earn you a certificate of completion that’s good for one year. You can use this certificate to qualify for assistance programs available in your local area. A HUD-certified housing counselor can help you find these programs, but first, you need to take the course.

If you are local in Southeast Florida, Consolidated Credit provides a free homebuyer workshop every month:

We also offer the course online if you aren’t local or you prefer to take the course at home in your own time.

online homebuyer course
online homebuyer course