You can use the Home Buying Power experience to estimate your personalized rates, and learn how to improve your situation to make progress towards your home buying goals.
Go to the Credit Karma Home Buying Power experience now.
Home Buying Power
Using your income and savings information, you can estimate your Home Buying Power on Credit Karma. You can track changes to your home buying power over time, learn about the different factors that can influence it, and get advice for your home buying journey.
The following factors are used in estimating your maximum home buying power:
Credit is a large component in making up your Home Buying Power estimate. Mortgage lenders will use the middle FICO score when looking at your FICO scores from the three major consumer credit bureaus. Credit Karma uses your VantageScore 3.0 credit scores from TransUnion and Equifax, but these scores can give you an idea of your credit health.
- If you’re buying a home with someone else, the lender will use the lower of your two scores.
Debt to Income ratio
- Your Debt to Income (DTI) ratio is how much you make versus how much you owe every month. Your DTI is calculated by taking the minimum monthly payments on your existing debts, adding the monthly payment of the mortgage loan you're looking to get, and dividing by your monthly income (before taxes).
- Some ways you may be able to change your Debt to Income ratio include:
- Focus on paying off your accounts with the highest monthly payments rather than the highest balances total when paying down debt.
- As lenders will factor in your future home payments to your debt-to-income ratio, you should aim to keep your max home buying power below 43% DTI.
While many people think that they need a minimum of 20% for their down payment, this is not true and should not stop you from taking the first step!
However, a higher down payment could save you more money in monthly payments and interest. It’s good to put down as much as you can comfortably afford, but lenders also want to see that you still have some leftover savings.
Read more about down payments here: How big of a down payment do I need?
Other factors involved include market rates, which are impacted by a variety of economic factors. While market rates are out of your control, it’s good to keep track of these to note whether the market is trending low or high. For example, if market rates fall, you may be able to bid on a house below asking price.
You can view and play with your credit, DTI and down payment factors as part of the Credit Karma Home Buying Power experience in order to help you plan ahead or set goals.
Once you’ve estimated your Home Buying Power, you can shop for personalized mortgage rates. By comparing your home loan options, you can view options from multiple lenders.
Learn more about 7 documents you need when applying for a home loan.
Home Buying Checklist
Throughout your home buying journey, you can refer to the Home Buying Checklist, which includes helpful articles to guide you on your journey.