1. What is the Zillow Affordability Calculator?

The Zillow Affordability Calculator estimates the maximum mortgage amount you can afford based on your income and current interest rates, using the standard 28% front-end debt-to-income ratio.

2. How Does the Calculator Work?

The calculator uses the Zillow affordability formula:

Where:

• \( Income \) — Annual income in USD
• \( Rate \) — Annual interest rate as decimal (e.g., 0.05 for 5%)
• 0.28 — Standard 28% front-end debt-to-income ratio

Explanation: The formula calculates the maximum mortgage payment you can afford (28% of monthly income) and determines what loan amount would result in that payment at the given interest rate.

3. Importance of Mortgage Affordability

Details: Understanding your affordable mortgage range helps in home shopping, budgeting, and ensuring you don't become house-poor by taking on more debt than you can comfortably manage.

4. Using the Calculator

Tips: Enter your gross annual income before taxes and the current annual mortgage interest rate as a decimal (e.g., 0.04 for 4%). All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What is the 28% rule?
A: This standard guideline suggests spending no more than 28% of your gross monthly income on housing expenses (mortgage, taxes, insurance).

Q2: Does this include taxes and insurance?
A: No, this calculates principal and interest only. You should budget additional funds for property taxes and insurance.

Q3: How does interest rate affect affordability?
A: Higher rates decrease the loan amount you can afford for the same payment, while lower rates increase it.

Q4: Should I borrow the maximum amount calculated?
A: Not necessarily. Consider your other debts, expenses, and financial goals before committing to the maximum mortgage.

Q5: What other factors affect home affordability?
A: Down payment amount, credit score, other debts, property taxes, insurance costs, and HOA fees all impact what you can truly afford.