Simply estimate your loan payments, taxes & PMI. Determine how much your monthly mortgage payments could be. Compare offers from competing lenders and see how even a small change in your interest rate affects what you pay over the life of your loan.
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Next Steps: What To Do After You Have Estimated Your Mortgage Payments
Getting a mortgage approval helps you understand what you can afford and ensures you're ready when you find your dream home.
Mortgage lenders offer a wide variety of loan terms and interest rates to buy or refinance a home. Learn how to select the loan that best meets your needs.
Why Use a Mortgage Calculator?
Using a mortgage payment calculator helps you establish a budget before buying a home. Budgeting helps you head off problems and keeps you from getting in over your head financially. If your home purchase will increase your housing costs, for instance, you need to determine where you’ll find the extra money. What expense can you cut to make your home purchase affordable?
A mortgage payment calculator reveals the different components of a prospective mortgage payment. Those include more than just principal and interest. You’ll be paying property taxes and homeowners insurance, and possibly other costs — like private mortgage insurance (PMI) premiums, homeowners association (HOA) dues and flood insurance charges.
However, a simple mortgage calculator does not incorporate all homeownership costs. Maintenance and repairs often surprise first-time buyers. You can estimate potential expenses with one of two formulas: either 1% of the home price per year, or $1 per year for every square foot of space. To make costs more predictable, consider purchasing a home warranty. Additional hidden costs might include higher utility charges, lawn and yard services, higher cleaning costs and new furniture.
How to Use a Mortgage Calculator
Mortgage calculators help you with many steps of your home purchase and allow you to make informed choices. You can use a mortgage calculator when shopping for or purchasing a home, considering when to pay off your mortgage, and when determining the type and length of home loan to apply for. In general, when using a mortgage calculator, you'll need to know the home price, your downpayment amount and the interest rate. Other factors, like HOA fees and insurance, may help you get the most accurate estimate.
- Determining how much of your home you can afford: You can play around with different loan amounts (like jumbo loans) and interest rates to see how they translate into a monthly payment. And by clicking the “Affordability” tab, you’ll see if the home is affordable to you based on typical mortgage lender guidelines.
- Deciding what type of mortgage to get: Mortgage programs offer a combination of advantages and drawbacks. A 15-year loan, for instance, has a lower interest rate and much lower total interest costs than a 30-year loan. But the monthly payment is higher and might not be affordable to you.
- The total cost/interest of the loan: Click the “Schedule” tab and move the slider to see how your loan balance falls over the life of the loan. You can see the allocation of your total payments at any point in time and the total costs over the life of the loan.
- Paying off a mortgage early: Under the “Schedule” tab, input one-time, annual or monthly prepayments to see how they reduce your costs and repayment time.
How to Use the MoneyGeek Mortgage Calculator
To use MoneyGeek's mortgage calculator, you'll need to provide a few simple numbers to determine your home costs. Enter these numbers in the tool above to estimate your overall mortgage costs.
- Home Price: You can input the maximum home price you’re considering and let the calculator determine the loan amount. Or click “Enter a loan amount instead” to find a loan payment without worrying about the other elements.
- Down Payment: You can enter the down payment as either a dollar amount or a percentage of the purchase price. The calculator uses this amount to set the loan amount.
- Interest Rate: Enter the loan’s interest rate. You can get rates from MoneyGeek’s daily mortgage rates report or obtain quotes from individual mortgage lenders.
- Loan Terms: Select the length of your desired loan from the drop-down list. The most common are 15 and 30 years, but 10- and 20-year loans are also available.
- Payments per Year: Payments per year matters when calculating a loan payment. For monthly payments (most common), the number is 12.
- Property Tax: If you know the tax bill for a specific property, you can input it under “Other fees.” Click the “Annually” link and enter the yearly property tax. If you don’t have a specific property, check the assessor’s site to find the local tax rate. You can also enter tax on a monthly basis by clicking the “Monthly” link.
- HOA Fees: If your property has a homeowners association (HOA), you’ll pay dues. Click the “Annually” or “Monthly” link and enter the dollar amount of your dues.
- Principal & Interest: The principal is the part of your payment that returns the money you borrowed to the lender. Interest is what you pay to compensate the lender for advancing money to you.
- Monthly Payment: The total monthly payment includes principal and interest, which repays your loan. You’ll also pay property taxes (either as part of your payment to your lender or separately), homeowners insurance premiums and possible HOA dues.
- Principal Payment: The principal payment is the part of your monthly mortgage payment that reduces your balance. At first, most of your payment goes toward the interest charged.
- Interest Payment: The interest payment is part of your monthly mortgage payment, which covers your interest charges. Over time, this amount becomes smaller as you pay down your loan balance.
- Total Cost with Interest: Your total cost includes the repayment of your principal balance plus the total interest paid to the lender.
Current Rates to Help Calculate Your Mortgage Payments
Changing interest rates can impact your housing costs. To get the most accurate mortgage calculation, you should factor in current interest rates and lock in a low rate when you're ready to buy. Review today's mortgage rates to learn more about economic factors that impact interest trends. This daily report can also help you determine when to lock in your rate.
Geek Out: Equation to Calculate Your Mortgage Payment
Most people use an online mortgage calculator, a spreadsheet or a financial calculator to come up with their principal and interest payment. The actual formula to calculate loan payments by hand is fairly complicated:
M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1]
- P = principal loan amount (that’s your amount borrowed)
- i = monthly interest rate (your annual interest rate divided by 12)
- n = number of months required to repay the loan (term of the loan in years multiplied by 12 months)
You can get a principal and interest, or P&I payment by using the PMT formula in Excel:
PMT(i, n, P)
Finally, you can use a financial calculator to calculate a P&I. Enter the three mortgage loan terms:
- Number of payments (loan term times 12). The entry key will be an N or n.
- Interest rate. Divide the annual mortgage rate by 12 and enter using the I, i or I/Y key
- Loan amount. The amount of the mortgage loan is the present value entered using the PV key.
Select the payment (PMT) key or compute plus payment — CPT plus PMT — keys to calculate the monthly mortgage payment. For example, enter 360 for “n” on a 30-year mortgage. Next, enter 0.0029 for the monthly interest rate on a 3.5% loan and $100,000 for the amount of the loan. The resulting payment amount should be $449.27.
Mortgage Calculator Frequently Asked Questions
There are many rules of thumb for mortgage affordability. A mortgage lender might determine a home loan is affordable if your debt-to-income (DTI) ratio is 43% or lower. Others set the maximum DTI at 36% or 50%. But affordability is a personal decision. How much are you comfortable spending on a mortgage? Lenders don’t consider your goals, family plans or lifestyle when evaluating your loan application.
Your debt-to-income ratio, or DTI, incorporates your monthly debt payments plus your housing payment, including principal, interest, taxes, homeowners insurance and HOA dues if applicable. It does not count living expenses, like food or utilities, or taxes. The higher your DTI, the less wiggle room you have if your income drops or an unexpected expense crops up.
The more you put down when you buy your home, the less you have to finance, and the lower your monthly payment will be. That said, there are many mortgage programs that require less than 5% down. And government-backed VA and USDA programs require no down payment.
Private Mortgage Insurance (PMI) is a requirement for most conventional loans, which are non-government loans. You can get rid of PMI by refinancing if your new loan won’t exceed 80% of the current property value. Or you can request termination of PMI when your loan balance drops to 80% of the original property value. PMI terminates automatically when the loan balance falls to 78% of the original property value if paid on the original loan schedule. You don’t get automatic termination by prepaying your loan. If you have a USDA or FHA loan, the only way to cancel its mortgage insurance is to pay it off.
There are several strategies for paying off your mortgage.
- Use a refinance calculator and refinance to a loan with a lower payment, but continue to pay the larger amount. The extra will reduce your balance faster.
- Add an amount for principal reduction to your monthly payment.
- Divide your loan payment in half and pay it every two weeks.
- Make an extra payment once a year.
- Use your tax refunds and other windfalls to reduce your mortgage balance.
Some experts caution against prepaying home loans unless you have an emergency savings account, no higher-interest debt and have fully funded your retirement account. Others recommend directing your mortgage prepayment money to an investment or savings account, and then paying off your mortgage when you have enough saved to do so. This way, you have access to your money if you need it.
It feels good to zero out your mortgage balance. Many financial experts recommend paying off your home loan before retiring to lower your monthly bills and increase your financial security. But prepaying your mortgage isn’t always the smartest financial decision:
- Once your lender has your money, it’s hard to get it back for emergencies. You’d have to apply for a home equity loan and pay interest and fees.
- Paying off your mortgage may not save you much if your interest rate is low. You may be able to earn more by investing your extra money in stocks or other vehicles.
The decision to pay off a mortgage is personal. And it’s important, so consider asking a financial planner or accountant before prepaying your home loan.