Want to know how much you can afford?
To determine how much house you can afford, use this home affordability calculator to get an estimate of the property price you can afford based upon your income and debt profile. Generally, lenders cap the maximum monthly housing allowance (including taxes and insurance) to lesser of Front End Ratio (34% usually) and Back End Ratio (42% usually).
Prequalifying for a mortgage is simple and is intended to give you a working idea of how much mortgage you can afford. Combine this amount with your down payment, and you’ll answer your question of “how much house can I afford?” This is not the same as being preapproved for a loan, which involves placing an application and providing documentation to a lender.
Remember — this is just a guide. Your final amount will vary depending on a number of factors, especially interest rate, which will be based on your credit score. When you’re ready, a lender can give you a more exacting figure.