- Last Updated: Sunday, 18 November 2018
You can use this calculator to figure out how much money you need to make to qualify for a mortgage. The calculator provides the user with two annual income values, based on the most common measures that lenders use: The rules of 28 and 36.
The variables used in our online calculator are defined in detail below, including how to interpret the results.
Total Home Loan Amount ($)
The total amount of money borrowed for this mortgage, also referred to as the principal of the loan.
Annual Interest Rate (%)
This is the annual interest rate on the mortgage. This is not the APR, which takes into account other costs associated with the mortgage.
Term of the Loan (Years)
This is the original term or length of the mortgage, stated in years.
Property or Real Estate Taxes ($ / Year)
This is where you would provide an estimate of the annual property taxes, or real estate taxes, that you might be paying each year.
Homeowners Insurance ($ / Year)
Homeowners insurance is not only a smart way for the home’s owner to protect their investment, but if you have a mortgage, then the lender will likely require you to carry adequate insurance to protect their investment.
Other Monthly Debt Obligations
In this section of the calculator model, you will be entering all of your other monthly debt obligations; excluding those directly associated with the home itself.
Personal Loans ($ / Month)
If you have a personal loan from a lending institution, then enter your required monthly payment here.
Association Fees / Dues ($ / Month)
Some housing developments charge association fees or dues for expenses such as snow removal, or lawn care costs for common areas. If you’re planning to live in a community that charges fees, then enter that monthly amount here.
Car Loans or Leases ($ / Month)
If you have a car lease or loan, then enter your monthly payments here.
Student Loans ($ / Month)
If you’re still paying off a student or college loan, then enter your monthly payment amount here.
Other Loans ($ / Month)
If you have any other monthly financial obligations, then this calculator needs those amounts entered here.
Payments Due on Mortgage ($/Month)
This is the monthly mortgage payment for the loan itself. This does not include mortgage insurance or property taxes, which are sometimes included with your mortgage payment, and addressed later on by this calculator.
Monthly Payments Relating to the Home ($ / Month)
Your monthly payments relating to the home converts your real estate taxes and homeowner’s insurance into monthly amounts. In this situation, your monthly mortgage payment is also included. This is the value that is important when using the rule of 28.
Total Other Monthly Debt Obligations ($ / Month)
This is the total of all your other monthly debt obligations.
Total of all Monthly Debt Payments ($)
This value is the total of all your monthly debt payments including the mortgage itself, all of the loans, fees, insurance, and real estate taxes.
Gross Annual Income Based on Rule of 28 ($ / Year)
This is the required gross annual income you need to qualify for a mortgage based on the rule of 28. Your gross annual income is the money you make before any taxes are taken out. This value is all employer compensation for the year, including bonus payments and compensated overtime, in addition to your base salary. In general, if you include a bonus or overtime amounts, then you may need to provide proof that these payments are not unusual, and can be “counted on” each year.
Gross Annual Income Based on Rule of 36 ($ / Year)
This is the required gross annual income you need to qualify for a mortgage based on the rule of 36. This value can be higher or lower than the rule of 28, depending on how much other debt you’ve accumulated.
Disclaimer: These online calculators are made available and meant to be used as a screening tool for the investor. The accuracy of these calculations is not guaranteed nor is its applicability to your individual circumstances. You should always obtain personal advice from qualified professionals.