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Determining what your monthly house payment will be is an important part of figuring out how much house you can afford. That monthly payment is likely to be the biggest part of your cost of living.

Using our mortgage calculator lets you estimate your mortgage payment when you buy a home or refinance. You can change loan details in the calculator to run scenarios. The calculator can help you decide:

 

The home loan term length that’s right for you. 30-year fixed-rate mortgage lower your monthly payment, but you’ll pay more interest over the life of the loan. A 15-year fixed-rate mortgage reduce the total interest you'll pay, but your monthly payment will be higher. c

 

If an ARM is a good option. Adjustable-rate mortgages start with a "teaser" interest rate, and then the loan rate changes — higher or lower — over time. A 5/1 ARM can be a good choice, particularly if you plan on being in a home for just a few years. You’ll want to be aware of how much your monthly mortgage payment can change when the introductory rate expires, especially if interest rates are trending higher.

 

If you’re buying too much home. The mortgage payment calculator can give you a reality check on how much you can expect to pay each month, especially when considering all the costs, including taxes, insurance, and private mortgage insurance.

 

If you’re putting enough money down. With minimum down payments commonly as low as 3%, it's easier than ever to put just a little money down. The mortgage payment calculator can help you decide what the best down payment may be for you.

 

How lenders decide how much you can afford to borrow

Mortgage lenders are required to assess your ability to repay the amount you want to borrow. A lot of factors go into that assessment, and the main one is debt-to-income ratio.

 

Your debt-to-income ratio is the percentage of pretax income that goes toward monthly debt payments, including the mortgage, car payments, student loans, minimum credit card payments and child support. Lenders look most favorably on debt-to-income ratios of 36% or less — or a maximum of $1,800 a month on an income of $5,000 a month before taxes.

 

» MORE: Calculate your debt-to-income ratio

 

Typical costs included in a mortgage payment

If your mortgage payment included just principal and interest, you could use a bare-bones mortgage calculator. But most mortgage payments include other charges as well. Here are the key components of the monthly mortgage payment:

 

Principal: This is the amount you borrow. Each mortgage payment reduces the principal you owe.

 

Interest: What the lender charges you to lend you the money. Interest rates are expressed as an annual percentage.

 

Property taxes: The annual tax assessed by a government authority on your home and land. You pay about one-twelfth of your annual tax bill with each mortgage payment, and the servicer saves them in an escrow account. When the taxes are due, the loan servicer pays them.

 

Homeowners insurance: Your policy covers damage and financial losses from fire, storms, theft, a tree falling on your house and other bad things. As with property taxes, you pay roughly one-twelfth of your annual premium each month, and the servicer pays the bill when it's due.

 

Mortgage insurance: If your down payment is less than 20% of the home’s purchase price, you’ll likely pay mortgage insurance. It protects the lender’s interest in case a borrower defaults on a mortgage. Once the equity in your property increases to 20%, the mortgage insurance is canceled, unless you have an FHA loan backed by the Federal Housing Administration.

 

Typically, when you belong to a homeowner’s association, the dues are billed directly, and it's not added to the monthly mortgage payment. Because HOA dues can be easy to forget, they're included in our mortgage calculator.

 

Reducing monthly mortgage payments

The mortgage calculator lets you test scenarios to see how you can reduce the monthly payments:

 

Extend the term (the number of years it will take to pay off the loan). With a longer term, your payment will be lower, but you’ll pay more interest over the years. Review your amortization schedule to see the impact of extending your loan.

 

Buy less house. Taking out a smaller loan means a smaller monthly mortgage payment.

 

Avoid paying PMI. With a down payment of 20% or more, you won’t have to pay private mortgage insurance. Similarly, keeping at least 20% equity in the home lets you avoid PMI when you refinance.

 

Get a lower interest rate. Making a larger down payment can not only let you avoid PMI, but reduce your interest rate, too. That means a lower monthly mortgage payment.

 

Monthly mortgage payments can go up

Your monthly payment can go up over time if:

 

  • Property taxes or homeowners’ insurance premiums rise. These costs are included in most mortgage payments.

  • You incur a late payment fee from your mortgage loan servicer.

  • You have an adjustable-rate mortgage, and the rate rises at the adjustment period.