Determining how much home you can afford means figuring out what size mortgage a lender will qualify you for. To calculate this number, lenders use:

• Your income
• Your credit rating
• The size of the down payment
• The length of loan (15 years vs. 30 years)
• The amount of your outstanding debts
• The interest rate for your mortgage
• The likelihood that you won't be able to pay back your loan

Using our Calculators, you can estimate what size mortgage you'll qualify for, and what the monthly payments will be depending on the size of your down payment. By getting these estimates, you'll be confident entering realistic figures when you go to get prequalified or preapproved for a loan.

When lenders analyze your general position as a borrower, it is called prequalification. Using only the information that you provide, the prequalification process enables a lender to estimate what size mortgage you will probably qualify for (and therefore how much home you can afford). Keep in mind that prequalification isn't an application for a loan nor a lender's commitment to offer you a mortgage.

So why get prequalified? First of all, it gives you an idea of what you can borrow so you don't waste time looking at homes you can't afford. While looking for a home, it will also help in making an initial offer because it is evidence that you will be able to pay for the home. Third, when you apply for a loan, it will speed the process because you will have already assembled all of the financial documents that you're likely to need.

• The Buying Process
• What Can You Afford?
• Buy vs. Rent
• Finding a Home
• Getting Financing
• Closing the Deal