I came across this handy calculator on my bank’s web site. You input how much down payment you have and how much you can afford to spend on housing per month.
In addition, you add the property tax rate, property insurance, mortgage interest rate and length of your mortgage.
I like how the calculator can help you stay on budget. If you know you don’t want your total payment to be more than $1,000, for example, it will help you determine how much house you can afford on that budget.
Factoring in property taxes is a big deal for me.
Here in Pittsburgh, I could expect to pay $3,500 (or more) in property taxes on a $125,000 house.
If I had $1,000 to spend on a monthly payment (mortgage, taxes, insurance, PMI) I could afford a $97,000 house in Pittsburgh.
The same payment in Indianapolis could get me into a $115,000 house, simply because the taxes are lower there.