Definitions
Monthly income: Total monthly income from all sources. All income should be entered before taxes.
Monthly housing expenses: Your monthly housing expenses from the housing expenses worksheet. The items entered as housing expenses make up the taxes and insurance portion of your monthly housing payment.
Monthly liabilities: Your monthly liabilities from the liabilities work sheet. Your monthly liabilities are used to calculate your maximum monthly house payment.
Monthly housing payment (PITI): This is your total principal, interest, tax and insurance, or PITI, payment per month. This includes your principal, interest, real estate taxes, hazard insurance, association dues or fees and principal mortgage insurance, or PMI. Maximum monthly payment (PITI) is calculated by taking the lower of these two calculations:
- Monthly Income X 28% = monthly PITI
- Monthly Income X 36% - other loan payments = monthly PITI
Maximum principal and interest (PI): This is your maximum monthly principal and interest payment, or PI. It is calculated by subtracting your monthly taxes and insurance from your monthly PITI payment. This calculator uses your maximum PI payment to determine the mortgage amount that you could qualify for.
Start interest rates at: The current interest rate you could receive on your mortgage. This is used as the starting point for displaying a range of interest rates and the resulting mortgage amount.
Term in years: The number of years over which you will repay this loan. The most common mortgage terms are 15 years and 30 years.
