Before stepping outside to go house hunting, you should find out how much you can afford. If you don't know what you can afford then it is a waste of your time, as well as a realtor's time, to even go looking at houses. Knowing how much you can afford will enable you to spend your time looking at only those houses in your price range.

If you're not ready for the stress and overwhelming amount of information that comes from dealing with a lender, then using a mortgage calculator to provide you with a rough idea of how large a monthly payment you can afford is a great option.

Using a mortgage calculator is simple. Before you start, make sure you have the following information handy: your total income, savings, and monthly debts. If your spouse or another co-borrower will be on the loan, then you also need to compile this information for them as well. Once you've gathered this information, you are ready to start.

The first thing you need to do is fill in your income, which is your gross income and not your actual take-home pay, then your savings, and then your total monthly debt. Remember not to type in the commas. Most online mortgage calculators will add these for you.

The next thing you need to do is select an income period. If you typed in what you make annually, then select annual. If you typed in what you make monthly, then select monthly. And so on, and so forth.

What you input in as savings in a mortgage calculator should include all of the money that you will have to cover closing costs and also make your down payment. This can also include any gifts that you may receive from relatives.

The monthly amount of debt that you input should include such payments as student loans, car loans, mandatory child support, and/or credit card payments. However, be aware that you should not count credit card payments if you pay off your balance each month without ever owing interest. Debts such as your current housing expenses, such as your rent or mortgage, should not be included the mortgage calculator.

When you come to the option for the interest rate, you can either choose the default value or input your own. Be aware that a mortgage calculator won't produce accurate results if you use a rate on a 15-year loan or on a one-year ARM. The default value given is based on the current 30-year fixed rate with only one point.

Lastly, when you arrive at the results screen, there will be options that allow you to override some of the parameters you gave in order to recalculate. Included are the minimum required down payment percentage and also other parameters that are not user-specific on the initial screen. The former is beneficial because many people today are purchasing houses with no money down.

The results you get from using an online mortgage calculator will most likely not be accurate; however, they can provide you with a firm base from where to begin shopping from. Though it can be a hassle, as well as a bit time consuming, it is always best to consult a lender and get pre-approved for an amount you can afford. In the end, you will have to take this step anyway, but in the beginning a mortgage calculator can be a great tool that helps you begin the long process of owning a home.