1. What is the MPP Calculator?

The MPP (Max Purchase Price) calculator determines the maximum home price you can afford based on your monthly payment, interest rate, loan term, and down payment. It helps homebuyers understand their purchasing power.

2. How Does the Calculator Work?

The calculator uses the MPP formula:

Where:

• \( \text{Monthly Payment} \) — Your affordable monthly payment (USD)
• \( r \) — Monthly interest rate (annual rate ÷ 12)
• \( n \) — Total number of payments (loan term in years × 12)
• \( \text{Down Payment} \) — Initial payment amount (USD)

Explanation: The formula calculates the present value of all future monthly payments (loan amount) and adds the down payment to determine the maximum purchase price.

3. Importance of MPP Calculation

Details: Knowing your MPP helps set realistic home-buying expectations, ensures affordability, and prevents overextending your budget.

4. Using the Calculator

Tips: Enter your comfortable monthly payment, current interest rates, desired loan term, and available down payment. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: Does MPP include taxes and insurance?
A: No, this calculates only principal and interest. For complete affordability, consider adding 1-2% of home value annually for taxes/insurance.

Q2: How does interest rate affect MPP?
A: Higher rates decrease MPP as more of your payment goes toward interest rather than principal.

Q3: What's a typical down payment percentage?
A: Conventional loans often require 20%, but FHA loans may accept as little as 3.5%.

Q4: Should I use gross or net income for calculations?
A: Use net (after-tax) income for more accurate affordability assessment.

Q5: How does loan term affect MPP?
A: Longer terms increase MPP by spreading payments over more months, but result in higher total interest paid.