Mortgage pre-qualification calculator

Our mortgage prequalification calculator gives you a good idea of how much house you might comfortably afford. You’ll also be able to see your monthly mortgage payment.

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. 

Credible’s 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 our 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.

A prequalification is a rough estimate of what you might be able to borrow and the rates you might qualify for, based on the financial information you provide to a lender. You can typically complete a prequalification in a matter of minutes.

In most cases, a lender will not perform a hard credit check. Instead, they’re likely to ask you for your estimated credit score or use a soft credit check, which has no impact on your credit score.

Prequalification and pre-approval: What's the difference?

While prequalification is a more casual process with a soft credit check, a mortgage pre-approval requires extensive documentation, including proof of income, tax returns, and identification. Your lender will also perform a hard credit check.

While a pre-approval isn’t a guarantee, it does offer some level of commitment from the mortgage lender in terms of the amount you can borrow and the interest rate you’re likely to receive.

Learn More: Mortgage Pre-Approval vs. Prequalification

Mortgage prequalification is determined by looking at your financial situation and then letting you know how much you might qualify for. Some of the factors involved include:

• Debt-to-income ratio (DTI): Unless you have a high down payment and credit score, most lenders want to see a DTI of 43% or less. However, a 28/36 qualifying ratio is what’s likely to get you the best rates. With this ratio, no more than 28% of your income should be going to housing expenses, and your total monthly debt payments (including the new mortgage) should amount to no more than 36% of your pre-tax income.
• Down payment amount: Lenders want to know how much you have to put down as they determine the loan costs and interest rate to offer you.
• Basic financial information: You generally need to share your income and let the lender know approximately how much you have in the bank.
• Estimated credit score: The higher your score, the more likely you are to get a good mortgage rate. Work on improving your credit score as much as possible before applying for a mortgage.

If you used the mortgage prequalification calculator and had hoped to buy a home for more than you can currently prequalify for, there are some options for increasing your prequalification amount.

Reduce your debts

Pay down your debts to reduce your DTI. With fewer obligations, you’re more likely to be approved for a home loan with a higher monthly payment. Identify a loan you can pay off quicker and tackle that debt.

Boost your credit score

Look for ways to improve your credit score. This can include paying down revolving lines of credit, like credit cards, making your payments on time, and fixing mistakes in your credit report. Also, limit how often you apply for new accounts before you get a mortgage prequalification or pre-approval.

Keep Reading: Mortgage Qualifications: How to Qualify for a Mortgage