Mortgage Calculator

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Payment Summary

Total Monthly Payment

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Base Mortgage Payment

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Principal & Interest only
Additional Monthly Costs
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Payment Breakdown

Total Interest

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Total Cost

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Including down payment

Understanding Your Mortgage

5 Steps to Calculate Your Payments
  1. Enter your home price in the "Home Price" field.
  2. Input your down payment (either as a dollar amount or percentage).
  3. Select your loan term (typically 30 years, but can be 20, 15, or 10).
  4. Enter your expected interest rate.
  5. Add additional charges like property taxes, insurance, and HOA fees.
Understanding Your Mortgage Payment

Your monthly mortgage payment consists of several components. The principal is the actual amount you borrowed from the lender, while interest is the cost of borrowing that money. Your lender may also collect monthly amounts for property taxes, which are assessed annually by local authorities, and homeowners insurance, which protects against damage and financial losses. If your down payment is less than 20% of the home's purchase price, you'll likely need to pay for mortgage insurance as well.

The Math Behind Your Mortgage

The monthly mortgage payment (M) is calculated using this formula:

M = P * [r(1 + r)^n] / [(1 + r)^n - 1]

Where:

  • M: Total monthly mortgage payment
  • P: Principal loan amount
  • r: Monthly interest rate (annual rate ÷ 12)
  • n: Total number of payments (years × 12)
Additional Costs to Consider

Beyond your monthly mortgage payment, there are other costs to consider when buying a home. Closing costs typically range from 2% to 5% of the loan amount and include fees for loan origination, underwriting, and purchase recording. You'll also need to budget for ongoing homeownership costs such as HOA fees, maintenance, and repairs.

The 28/36 Rule and Affordability

A common guideline for home affordability is the 28/36 rule: your monthly mortgage payment should not exceed 28% of your gross monthly income, and your total debt payments should not exceed 36%. For example, if your annual income is $60,000 (monthly income of $5,000), your mortgage payment should not exceed $1,400 per month.

Tips to Lower Your Monthly Payment

There are several effective strategies to make your mortgage more affordable. You might consider choosing a longer loan term, which can significantly reduce your monthly payments, although you'll pay more in interest over time. Looking at less expensive homes can also help you stay within your budget. It's worth shopping around for lower interest rates, as even small rate differences can lead to substantial savings over time. Making a larger down payment is another effective way to reduce your monthly costs. While many homeowners are tempted to stretch their budget when buying a home, taking a conservative and cautious approach to home purchasing is often the wisest decision for long-term financial stability.