Based on the information you gave us, we used the following assumptions to estimate the maximum price of a home you could buy. Remember, this is just an estimated number, and there are more factors that you may want to consider when buying a house.

Assumptions and other considerations

1. Property taxes

The tool makes the assumption that the annual property tax payment is 1.15% of the home’s market value.

2. Interest rate and loan duration

A constant interest rate of 7.03% and loan duration of 30 years are used to calculate the annual mortgage payment using an ordinary annuity formula. The monthly mortgage payment is derived by dividing the annual payment by 12.

3. PMI

Lenders often resell the mortgage to government-sponsored enterprises Fannie Mae and Freddie Mac. These loans need to conform to the Fannie Mae and Freddie Mac guidelines. One important requirement is the need to pay mortgage insurance if the down payment is less than 20% of the home value. While there are different kinds of nonconforming loans, like FHA, VA, or jumbo loans, we are treating all the loans as conforming loans with only private option for mortgage insurance (PMI). The maximum loan value constraint is also ignored for simplicity. The annual amount of PMI is assumed to be 0.5% of the home value. If the “Use PMI” option is not selected, the PMI amount is excluded from the calculations and the down payment is not allowed to fall below 20% of the home value. If the “Use PMI” option is selected, the PMI amount is considered and the tool may produce a solution that includes a down payment as low as 5%. Speak with your lender for more detailed information about PMI.

4. Down payment and closing costs

Buying costs are assumed to be 2% of the home value. The chosen current savings amount is assumed to cover both down payment and buying costs.

5. Maintenance and home insurance

Home insurance is assumed to be 0.35% of the home value per year. Maintenance and improvement costs are assumed to amount to 0.5% of the home value per year.

6. Monthly Costs

Monthly costs include the mortgage payment, property taxes, home insurance costs, and PMI (if applicable).

Other considerations

The calculator estimates and outputs the maximum home value that satisfies these two conditions:

• The input savings are sufficient to cover both the down payment and buying costs, with or without PMI.
• The total monthly obligations are less than a debt-to-income ratio of 36%. Total obligations include entered monthly debt payments, mortgage payment, property taxes, maintenance costs, home insurance costs, and PMI (if applicable).

IMPORTANT: This calculator provides a rough estimate of a maximum housing affordability value. The value shown is only an estimate, is hypothetical in nature, and is based on your input and the assumptions built into the tool. Please reach out to your bank or mortgage broker for a more precise estimate. The actual approvals from the mortgage broker may widely differ from our results due to differences in input, loan terms, current rates, underwriting standards, and your credit score, among other factors.

No record of this interaction or its results will be maintained.

Fidelity does not provide legal or tax advice. The information herein is general and educational in nature and should not be considered legal or tax advice. Tax laws and regulations are complex and subject to change, which can materially impact investment results. Fidelity cannot guarantee that the information herein is accurate, complete, or timely. Fidelity makes no warranties with regard to such information or results obtained by its use, and disclaims any liability arising out of your use of, or any tax position taken in reliance on, such information. Consult an attorney or tax professional regarding your specific situation.

The calculator is for illustrative purposes only.

This website is not intended for individuals under the age of 18.

Fidelity Brokerage Services, Member NYSE, SIPC, 900 Salem Street, Smithfield, RI 02917

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