Mortgage Calculator

How to Calculate Your Monthly Mortgage Payment With This Mortgage Calculator

You can enter a few basic numbers to calculate your monthly mortgage payment using this calculator.

1. Enter the home price. Your home price will be the amount you offer the seller. You might use the highest amount you want to spend or, if you have a particular home in mind, the list price. If you’re shopping in a competitive market and expect to be one of several bidders, however, you may want to make an offer that’s higher than the asking price. In slower markets or with properties that have been on the market for extended periods, a bid below asking price could succeed. Work with a real estate professional to determine your offer strategy.
2. Choose a down payment. When you enter the home price, the calculator automatically fills in the down payment field to reflect 20% of the home price. A 20% down payment can help you qualify for a lower interest rate and avoid paying for mortgage insurance. However, there are plenty of options available if you want to make a lower down payment. If you do make a down payment of less than 20%, be sure to add your estimated mortgage insurance premium in the advanced options tab.
3. Pick a repayment term (in years). Enter the number of years required to repay the mortgage. By default, this calculator assumes a 30-year mortgage, since that’s the most common term for a home loan in America. Other standard mortgage terms include 15 years, 20 years and 40 years. Adjust this number to see how changing the term affects your payment. All other factors being the same, longer mortgage terms mean lower monthly payments, but they also mean significantly greater interest costs over the life of the loan.
4. Estimate your interest rate. Review the charts below and enter an estimated interest rate based on your credit score and the type of mortgage you want. Make sure to enter the interest rate, not the annual percentage rate (APR). These figures can be similar, but the APR reflects your annualized costs, inclusive of interest charges and certain financing charges. Only enter the interest rate here.

Advanced Options

Using the advanced options can give you a more accurate estimate of your monthly housing costs.

• Property tax (annual): You may be able to estimate your annual property taxes by looking up the tax rate in the area where you want to buy a home. Multiply this by your home price, not your loan amount. Property taxes are not required to be included in your mortgage insurance and can be paid separately as long as your lender agrees.
• Home insurance (annual): Home insurance can cost several thousand dollars a year, but the amounts can vary widely depending on where you live, specifics about the home and your coverage amounts. It’s generally a requirement if you have a mortgage. You can get insurance quotes online or contact local insurance brokers or agents to see if you can get an estimate based on the type of home you’re trying to buy.
• Mortgage insurance: You may have to pay for private mortgage insurance (PMI) if you have a conventional loan with less than 20% down. It may cost around 0.2% to 2% of your loan amount, depending on your credit score, down payment and term. If you get an FHA loan, the mortgage insurance premium (MIP) is around 0.50% to 0.75% of the loan amount for loans with terms over 15 years. The annual guarantee fee for USDA loans is 0.35% of the loan amount.
• Monthly homeowners association (HOA) dues: This is an optional field that’s only applicable if you’re buying a condo or home that’s part of an HOA. Dues will vary depending on the HOA, and they may be disclosed on the home’s listing.

Your property tax, home insurance and mortgage insurance payments will be automatically added to your monthly mortgage payment if you have an escrow account. Collectively, they make up your PITI (principal, interest, taxes and insurance) payment. HOA dues generally aren’t part of your mortgage payments, but they will still be a required monthly payment.

Reading Your Results

After you fill in the applicable fields, press the Calculate button and you’ll be shown a results box with two tabs—Payment Summary and Payment Schedule.

• Payment Summary: This tab shows you your monthly payment and payoff date. It also shows your total costs, including a breakdown for the total principal and interest payments you’ll make. The totals for home property taxes, home insurance, mortgage insurance and HOA dues assume the payment amount stays the same for the life of the loan.
• Payment Schedule: The Payment Schedule shows you the breakdown of principal and interest on every monthly payment, and reflects the process known as amortization. Each month, you pay off the accrued interest, and the remainder of your payment goes toward the principal. You pay significantly more toward interest in the beginning of the loan’s term, and gradually shift to more principal and less interest as you near payoff.

Most people sell their home or refinance their mortgage before paying off their original loan. But the results can still help you compare the potential long-term impact of different mortgage offers.

What Impacts Your Monthly Mortgage Payment

Your monthly mortgage payment will always include payments for your principal balance and interest. Most people also make monthly payments into an escrow account that their mortgage servicer uses to pay their property taxes, homeowners insurance and other costs.

Anything that affects your mortgage amount, mortgage rate, insurance premiums and property taxes could affect your monthly mortgage payment.

• Loan amount: The amount of money you borrow will be one of the biggest factors in your monthly payment. It depends on how much you offer and how much you can put down.
• Interest rate: Your interest rate will determine how much interest accrues on your principal balance. Having a high credit score, having a low loan-to-value ratio, buying mortgage points and shopping for a mortgage can help you get a lower rate.
• Repayment term: The longer your repayment term, the lower your monthly payment. However, a shorter-term loan could have a lower interest rate and cost you less overall.
• Tax rates and bonds: Your property tax rates and local bond measures may change from year to year, increasing or decreasing your tax bill.
• Your home’s assessed value: Your home’s assessed value might rise or fall over time, which also affects how much you pay in property taxes.
• Mortgage insurance rates: Your mortgage insurance rate likely won’t change during your loan’s lifetime. However, you might be able to stop paying for mortgage insurance on a conventional loan once you have at least 20% equity in your home.
• Homeowners insurance rates: Homeowners insurance premiums could change when you go to renew. Shop around and look for other ways to save, such as bundling home and auto insurance.
• HOA dues and special assessments: Your HOA payments generally won’t be included in your mortgage payment, but you could ask your loan servicer if you can add them to your escrow account. HOA dues may change periodically, and you may have to pay one-time special assessments if the HOA has unexpected expenses.

There are also other costs to owning a home that won’t be part of your mortgage payment, such as utilities, routine maintenance and repairs. Be sure to budget for these as well.

How Much House Can I Afford?

You can use the 28/36 rule as a way to figure out how much house you can afford.

To stay within the guidelines, try to make sure your gross monthly income (before taxes and withholdings) is more than 28% of your mortgage payment, and less than 36% of your mortgage payment plus other loan payments.

Lenders won’t necessarily follow these guidelines when determining how much you can borrow. Instead, they focus on your:

• Credit score: A higher credit score could lead to a lower interest rate and monthly payment, which also means you might qualify for a larger loan.
• Debt-to-income ratio: Your debt-to-income ratio (DTI) compares your gross monthly income to your required monthly payments, including your new mortgage. You might qualify for a mortgage if your DTI is under 50%. But some lenders prefer if your DTI will be under 43%, and a DTI below 36% is even better.
• Down payment: Many mortgages require at least 3% or 3.5% down, but putting at least 20% down can help you save on interest and mortgage insurance. Some mortgages don’t require a down payment at all, and there are down payment assistance programs that might help you afford some of the upfront costs of buying a home. First-time homebuyers also might qualify for special programs that can give you low- or no-cost loans, or grants, for buying a home.
• Loan-to-value ratio: Lenders may list a maximum loan-to-value (LTV), but the LTV is essentially the opposite of your down payment. If you put 20% down, your LTV is 80%. If you put 3% down, it’s 97%.
• Mortgage reserves: Lenders might want to be sure you have enough money in savings to cover your mortgage payments in an emergency. The requirements can vary, but you may need three to 12 months’ worth of payments in reserves.

Even if you can get approved for a large loan and you’re within the 28/36 guidelines, that doesn’t necessarily mean you can afford the mortgage. These guidelines don’t consider financial obligations that aren’t housing or loan payments, such as how many people you’re buying groceries for or whether you’re caring for relatives.

Learn more >> How Far Will Your Salary Get You When Buying a House?

Current Mortgage Interest Rates

Mortgage rates can change daily—sometimes several times a day—and you won’t know your exact rate until you compare mortgage offers and lock in a rate. However, knowing the average rates can help you make an educated guess when using the mortgage calculator.

Current Mortgage Rates

Conventional mortgage loans are mortgages that aren’t part of government-backed programs. If you’re not getting an FHA, VA or USDA loan, you’re probably applying for a conventional loan. The average rates can vary significantly depending on the rate term, with a 15-year mortgage offering a much lower rate than a 30-year mortgage.

Adjustable-rate mortgages (ARMs) tend to be 30-year loans that start with a lower interest rate than a 30-year fixed-rate loan. The rate on an ARM is fixed for a specific period, and then it can periodically rise or fall based on changes in a benchmark rate.

For example, a 5/6 ARM will have a fixed rate for five years and can then adjust every six months. A 7/1 ARM has a fixed rate for several years and then adjusts annually.

Your credit score can also affect your interest rate, and you can check your FICO^® Score 8 from Experian. Mortgage lenders tend to use older versions of the FICO^® Score, but they’ll use a new FICO^® Score and a VantageScore^® soon. Either way, you can use your FICO^® Score 8 as a rough guide to help you estimate the rate on your loan.

Learn more >> Which Credit Scores Do Mortgage Lenders Use?

How to Improve Your Credit

As you can see from the average rate by FICO^® Score chart, you don’t need an 850 credit score to get the best rates. Assuming you qualify based on other criteria, such as your LTV, you might get the best rates once your score is at 780.

If your credit score is currently below 780, review your credit report from Experian to find out what factors are hurting your score the most.

Sometimes, you might not be able to address the issue immediately. For instance, late payments can stay on your credit report for seven years, and although the impact diminishes over time, they can hurt your credit even if you bring the account current.

However, lowering your revolving credit utilization rate by paying down credit card balances might quickly increase your scores. Similarly, bringing past-due accounts current can be helpful.

Paying off collection accounts also might help some of your credit scores, but not necessarily the ones mortgage lenders use.

Learn more >> New FHFA Credit Scoring Models

Types of Traditional Mortgages

There are several common types of mortgages that borrowers might compare depending on their qualifications, where they’re buying a home, their credit and how much they can afford to put down.

• Conventional fixed- and adjustable-rate loans: Conventional mortgages include several common types of loans, including fixed-rate loans with 10, 15, 20 or 30-year repayment terms, and different types of ARMs. The one common factor is that they aren’t part of government-backed loan programs.
• Jumbo loans: A jumbo loan is a type of conventional loan that has a higher loan amount than the Federal Home Finance Agency (FHFA) loan limits and doesn’t conform with Fannie Mae or Freddie Mac’s standards. These loans might require a higher credit score or down payment, and they could have higher rates than conventional loans.
• VA loans: Eligible service members, veterans and surviving spouses may qualify for a Department of Veterans Affairs (VA) loan. These loans might offer a lower interest rate than a conventional loan, and they don’t require a down payment. However, you might need to pay an upfront funding fee, and your rates and offers could still vary depending on the lender.
• FHA loans: The Federal Housing Administration (FHA) loans have less stringent eligibility requirements than conventional loans. They could be a good option if you don’t have a good credit score and can’t afford a large down payment. But, you may have to make mortgage insurance payments for the life of the loan.
• USDA loans: You can use direct or guaranteed U.S. Department of Agriculture (USDA) loans to buy a home. The loans don’t require a down payment and could have lower interest rates than conventional loans. Direct USDA loans may even offer a subsidy to lower your monthly payment. But your household income needs to be below certain limits, and the home has to be in an eligible rural area.

Mortgage Payment Formula

Mortgages are amortized loans and there’s a specific formula for making sure your monthly payments will be the same over the repayment period.

M = P (r (1 + r)^N ) / ((1 + r)^N − r)

• M is your monthly mortgage payment
• P is the principal loan amount
• r is the monthly interest rate, which is your annual rate divided by 12
• N is the number of monthly payments, which is 360 for a 30-year loan

Mortgage Glossary

There’s a lot to learn when you’re getting a mortgage. Here are a few key terms that you might come across:

• Appraisal: You generally need to pay for an appraisal when you get a mortgage. The appraisal will estimate the home’s value and may impact how much the lender is willing to loan you for the purchase.
• Closing costs: These costs make up the total amount you’ll need to pay when you close on your home, although sometimes you can wrap some of the costs into your loan’s balance. Closing costs include lots of fees and upfront payments. You can negotiate some of them, but the total generally winds up being around around 2% to 5% of your home price.
• Credits: Mortgage lenders may give you credits that you can use for your down payment, closing costs or other expenses in exchange for accepting a higher interest rate.
• Equity: This is the portion of the home’s value that you own. It will be your down payment when you buy the home, and the difference between the current fair market value and your mortgage balance in the future.
• Mortgage buydown: A mortgage buydown is when you buy a temporarily lower interest rate. For example, a 2-1 buydown will lower your interest rate by 2% the first year and 1% the second year. Sellers and builders may offer buydowns as an incentive to buyers.
• Points: Mortgage points or discount points are often referred to simply as points. The lender will give you a lower interest rate if you pay an upfront fee, or “buy points.” Technically, you’re prepaying interest, and each point often costs 1% of the loan amount.

Ready to Buy? Here’s How to Get a Mortgage

Start shopping for a mortgage as soon as you’re serious about buying a home. Making sure you’re ready and gathering loan offers can help you narrow in on a realistic and workable loan amount, which can help you save time in your house hunt.

• Get your documents in order. You’ll likely need to submit copies of paystubs, tax returns, bank statements, investment account statements and other documents to each lender. Start downloading and organizing these to make it easier to send them later.
• Contact several lenders and brokers. Reach out to several mortgage lenders and loan brokers to start the application process. You could contact the bank or credit union where you keep your everyday accounts, along with other local financial institutions, online lenders and recommendations from your real estate agent.
• Try to get preapproved. The mortgage preapproval process can be more complex than getting a prequalification, but it will give you estimated loan offers based on your actual information rather than approximates. The lender can also give you a preapproval letter that you can include in your offers, which might make your offer more appealing to sellers. Try to get preapproved with multiple lenders during a 14-day period to minimize the impact on your credit scores.
• Compare your loan offers. You can compare your mortgage preapprovals to figure out which type of loan will likely be best. You don’t have to choose a lender at this point, but consider which lenders have been easiest to work with up to this point.
• Lock your rate. The rates on your mortgage offers might change daily, or even more frequently. If you think rates might rise, you could try to lock your rate to guarantee it for the next 30 to 60 days. Otherwise, you might have to wait until after your offer is accepted to lock your rate.

Those steps only bring you up to the offer acceptance. And when that happens—congratulations! Once an offer is accepted, you’ll be in escrow and working closely with your real estate agent and lender to get all the paperwork in order and make sure the deal gets closed on time.

Learn more >> The Complete Guide on How to Get a Mortgage

Keep an Eye on Your Credit While Home Shopping

Your credit scores are always important, but they might have the largest impact on your finances when you’re buying a home. Make sure you don’t do anything that might hurt your scores while you’re shopping for a home, such as applying for new credit cards or missing loan payments. And check your credit from Experian to get suggestions for increasing your credit score.