Question 1

How much house can I afford as a first-time buyer?

Accepted Answer

A common rule of thumb is that your total monthly housing payment (principal, interest, taxes, insurance — PITI) should stay under 28% of your gross monthly income, and your total monthly debt payments should stay under 36%. This calculator uses the 28/36 rule by default, but lets you adjust the DTI (debt-to-income) target to match your lender's requirements. First-time buyer programs such as FHA loans often allow higher DTIs (up to about 43%) but charge mortgage insurance premiums.

Question 2

How much down payment do I need as a first-time buyer?

Accepted Answer

Conventional loans typically require 5% to 20% down. FHA loans require as little as 3.5% down. VA loans (eligible veterans) and USDA loans (eligible rural areas) can require 0% down. A larger down payment lowers your monthly payment and may let you avoid private mortgage insurance (PMI). Putting down less than 20% on a conventional loan usually requires PMI, which adds to your monthly cost.

Question 3

What are closing costs and how much should I expect?

Accepted Answer

Closing costs are one-time fees paid at closing, typically 2% to 5% of the home's purchase price. They include loan origination fees, appraisal, title insurance, escrow fees, recording fees, prepaid taxes and homeowners insurance. The calculator estimates 3% by default; you can adjust it. Some first-time buyer programs offer closing cost assistance grants that cover part of these fees.

Question 4

Should I include property taxes and homeowners insurance in my budget?

Accepted Answer

Yes — these are part of your total monthly housing payment and should always be included. Property taxes typically run 0.8% to 2.5% of the home's value per year depending on your state and county. Homeowners insurance averages about $1,500 to $2,500 per year nationally. HO-6 condo insurance, flood insurance and earthquake insurance can add more. The calculator includes taxes and insurance in the monthly payment estimate so you see the true PITI.

Question 5

What is PMI and how does it affect first-time buyers?

Accepted Answer

Private mortgage insurance (PMI) is required on conventional loans when you put down less than 20%. It typically costs 0.3% to 1.5% of the original loan amount per year, and is automatically cancelled once you reach 22% equity. FHA loans charge a similar mortgage insurance premium (MIP) for the life of most loans. This calculator adds an estimated PMI/MIP cost so your monthly payment reflects what you will actually pay.

💰 Your income & debts

🏦 Loan settings

📈 Your buying power

📋 Monthly payment breakdown

✅ First-time buyer checklist