1. What is the Home Purchase Budget Calculator?

The Home Purchase Budget Calculator helps potential home buyers determine their maximum affordable home price by considering their savings, approved loan amount, and estimated closing costs.

2. How Does the Calculator Work?

The calculator uses the simple formula:

Where:

• \( Savings \) — Your available cash savings for down payment and other costs
• \( Loan\ Approval \) — The mortgage amount you've been pre-approved for
• \( Closing\ Costs \) — Estimated fees and expenses to complete the purchase

Explanation: This calculation gives you the maximum home price you can afford while still covering all associated costs.

3. Importance of Budget Calculation

Details: Calculating your home purchase budget helps prevent overextending financially and ensures you can comfortably afford your new home while maintaining other financial obligations.

4. Using the Calculator

Tips: Enter your total available savings, the loan amount you've been approved for, and estimated closing costs (typically 2-5% of home price). All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What should be included in savings?
A: Include all liquid assets you're willing to use for down payment, closing costs, and reserves (typically 20% down is ideal to avoid PMI).

Q2: How accurate are loan approval amounts?
A: Pre-approval amounts represent maximum borrowing capacity, but your actual comfortable payment may be lower based on your budget.

Q3: What are typical closing costs?
A: Usually 2-5% of purchase price, including loan origination fees, title insurance, appraisal, and prepaid items like taxes and insurance.

Q4: Should I include emergency funds in savings?
A: It's recommended to keep 3-6 months of living expenses separate from your home purchase funds.

Q5: Does this account for monthly payments?
A: No, this calculates maximum purchase price. You should separately evaluate whether the resulting mortgage payment fits your monthly budget.