When buying a home, it’s important to have an idea of how much you can borrow — and what is most affordable for your financial situation. This is where a mortgage prequalification comes into play.

A prequalification calculator can help give you an idea of where you stand in terms of homebuying. It can be an especially helpful tool for first-time homebuyers who are at the beginning of the mortgage process.

A prequalification isn’t the same as a pre-approval — for one, the process isn’t nearly as involved. You’re only getting an estimate of what you can spend on a home purchase. With pre-approval, the mortgage lender checks your credit score and offers to lend you a certain amount of money for a home.

What you can do with this pre-qualification calculator

With this calculator, you can see how much you might prequalify for when you buy a house, as well as how much home you can comfortably afford. You can also compare the monthly payment between your prequalified amount and your easily affordable amount.

The calculator can be used to do the following:

Determine how much you’ll pay per month. Get an idea of how much you’ll end up paying with your estimated prequalified amount and compare it to how much you can afford to pay without any financial strain. This can help you set your homebuying budget.
Figure out a down payment. The amount you put down impacts your monthly payment, as well as how much interest you pay over time. With a mortgage prequalification calculator, you can try different scenarios with different down payment amounts.
Decide on a loan term. A 15-year mortgage has higher monthly payments than a 30-year loan — but you’ll be debt-free sooner and save money in interest. The prequalification calculator can help you compare loan terms and payments to find something that fits your budget.

What information you'll need

For the most accurate results, you’ll need to input the following pieces of information. Gather what you need ahead of time to speed up the process:

Household income: How much you make matters when it comes to determining your monthly payment. Mortgage lenders are also less likely to loan you money if you don’t have a regular income or if home loan payments overwhelm your monthly budget.
Down payment: If you know how much you have saved for a down payment, that will affect how much you can borrow. The more you can put down, the lower your monthly payment will be. With less than 20% down, you’ll likely need to pay for private mortgage insurance (PMI).
Monthly debts: How much you owe each month in debt payments, including credit cards, student loans, and car loans, can impact your loan amount. Typically, you don’t want your debt-to-income (DTI) ratio to exceed 43%.
Loan term: The longer the loan term, the smaller your monthly payments. But you’ll also pay more in interest. Figure out what loan term you’re comfortable with.
Property taxes: If you know the approximate property taxes in your area, you can get a more accurate picture of your prequalification. Many listings offer estimated property taxes, so take a look at a few promising listings to get a feel for how much you might pay.
HOA fees: Find out if there are HOA fees in areas you plan to move. Many listings share this information as well.
Homeowners insurance: The cost of your average homeowners insurance policy varies by state and other factors, such as your property type.

Mortgage pre-qualification calculator

How to use a mortgage prequalification calculator

What is mortgage prequalification?

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