To estimate your monthly mortgage payment, use our mortgage calculator. With it, you are able to input a different home price, down payment, interest rate, and loan term to see how your monthly payments will change.
The monthly payment estimates are broken down by interest and principal, property taxes and homeowners insurance. To give you a more exact payment estimate, you are also able to factor in your credit score range, zip code, and HOA fees. Having all of this information up front will allow you to go into the home-buying process with an accurate picture of how to calculate your mortgage payments.
How to Calculate Your Mortgage Payments
If you are mathematically inclined, there is a formula to help you calculate your mortgage payments if you want to find out how much your monthly payment will be. It is:
M = P[r(1+r)^n/((1+r)^n)-1)]
- M = total monthly mortgage payment
- P = principal loan amount
- r = monthly interest rate
- n = number of payments over the lifetime of the loan
What this formula does is help you crunch the numbers so that you can see how much house you’re able to afford. Using this tool to calculate your payments can take the work out of it for you and can help you decide if you need to adjust your loan term or whether or not you’re putting enough money down.
How Can a Mortgage Calculator Help?
Buying a home is one of life’s largest financial transactions. How you plan on financing your new home should not be a hasty decision. Well before you begin looking a houses, setting up a budget can help you avoid falling in love with a house you cannot afford.
Many home buyers are aware of the four components called the PITI: principal, interest, taxes, and insurance but are not prepared for the hidden costs of homeownership. These additional costs include private mortgage insurance, homeowners association fees, routine maintenance, major repairs, and larger utility bills.
Using our mortgage loan calculator, you will be able to factor in PITI and HOA fees. In addition, you can adjust your loan and down payment amounts, interest rate and loan term so that you can see how much you can expect your payments to change.
It is also important to know that your specific interest rate will depend on your overall credit profile and DTI, debt-to-income ratio. The DTI is the sum of all your debts and your new mortgage payment divided by your gross monthly income. Generally, the riskier the borrower, the higher the interest rate will be.
What to Do Next
Using a mortgage calculator is the starting point to helping you estimate what your monthly payment will be and to understand what it will include. After playing with the numbers, your next step is to get preapproved by a mortgage lender.
You will have a more precise idea of how much house you’re able to afford after applying for a mortgage. You will also have a better idea of how much money you will need to bring to the closing table.