Mortgage Calculator

What is a Mortgage Payment?

A mortgage payment is your monthly cost to borrow money for buying a home. It typically includes principal (paying down the loan), interest (cost of borrowing), taxes, and insurance.

Simple Mortgage Formula

Monthly Payment = Principal + Interest + Taxes + Insurance + PMI (if needed)

For example:

• Principal & Interest: $2,200
• Property Tax: $500/month
• Insurance: $100/month
• Total Monthly Payment: $2,800

What's a Good Mortgage Payment?

• 28% Rule: Your mortgage payment shouldn't exceed 28% of your gross monthly income
• 36% Rule: Total debt payments (including mortgage) shouldn't exceed 36% of income
• Example: $6,000 monthly income = maximum $1,680 mortgage payment

How to Use The Mortgage Calculator

Step 1: Enter Basic Loan Information

The calculator starts with sample data. Update it with your home details:

1. Home Price: Enter the purchase price (e.g., $450,000)
2. Down Payment: Enter your down payment amount (e.g., $90,000 for 20%)
3. Interest Rate: Enter your loan rate (e.g., 6.75%)
4. Loan Term: Enter years to pay off (typically 30 or 15)

Step 2: Add Property Costs

Include the ongoing costs of homeownership:

1. Property Tax: Enter your annual property tax (varies by location)
2. Home Insurance: Enter annual insurance premium (typically $800-2000)

Step 3: Review Your Results

The calculator shows multiple payment breakdowns:

• Monthly Payment: Just principal and interest
• Total Monthly: Including all costs (taxes, insurance, PMI)
• Loan Amount: How much you're borrowing

Quick Tips

• 20% down payment avoids PMI (Private Mortgage Insurance)
• Property taxes vary greatly by state and city
• Insurance costs depend on home value and location
• The calculator updates automatically as you change numbers

Frequently Asked Questions

What is PMI and when do I pay it?

PMI (Private Mortgage Insurance) is required when you put down less than 20%. It typically costs 0.3-1.5% of the loan amount annually and protects the lender if you default.

Should I choose a 15-year or 30-year mortgage?

15-year mortgages have higher monthly payments but lower total interest. 30-year mortgages have lower monthly payments but cost more over time. Choose based on your monthly budget and long-term goals.

How much house can I afford?

Use the 28/36 rule: mortgage payment under 28% of gross income, total debt under 36%. Also consider your down payment, emergency fund, and other financial goals.

What affects my interest rate?

Credit score, down payment size, loan type, and current market rates. Higher credit scores and larger down payments typically get better rates.

Do I need to include HOA fees?

The calculator doesn't include HOA fees, but you should factor them into your total monthly housing cost when determining affordability.

When will I break even on buying vs renting?

This depends on local rent prices, home appreciation, and how long you plan to stay. Generally 3-7 years, but use the calculator results plus rent comparisons to decide.

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