Mortgage Calculator: Estimate Your Monthly Payment & Costs

Mortgage Calculator

Mortgage Amount

Annual Interest Rate

Loan Term (Years)

Calculator Results

Monthly Payment
Total Interest Paid
Total Cost of Loan

A home loan balance with an average interest rate of paid over a year term will have a monthly payment of . In total, the loan will cost with in interest.

Calculating your mortgage payment is a crucial step before buying a home. Use our mortgage estimator to see your monthly payments and total interest, ensuring you can afford your dream home without financial strain.

Table of Contents Skip to Section

How to use our mortgage calculator
How to calculate a mortgage loan payment
More about mortgage payments
FAQ

How to use our free mortgage calculator

Using our home loan calculator is simple and effective for planning your home purchase. Follow these steps to get an accurate estimate of your monthly payments and total interest:

Enter your home’s value: Input the total price of the property you’re considering.
Provide the interest rate: Enter the interest rate offered by your lender.
Choose your loan term: Select the duration of your loan (e.g., 15 or 30 years).

The calculator will display your estimated monthly payment and total interest, helping you determine if the home fits your budget.

Benefits of using a mortgage loan calculator

Here are two reasons to use our home mortgage calculator.

Faster home buying process

A mortgage calculator can streamline the home-buying process by letting you know your budget and loan terms. This eliminates the need to negotiate financing at the last minute, which can save time and reduce stress. A clear understanding of your buying power makes the home search more efficient and focused.

Better budgeting

An online mortgage calculator helps you set a realistic budget for your home purchase. By knowing the maximum loan amount you qualify for and the interest rate, you can calculate your monthly payments and ensure they fit within your financial plan. This prevents you from overspending and helps you avoid financial strain.

How to calculate a mortgage payment

Calculating a mortgage payment involves a specific formula:

Where:

M = Total monthly mortgage payment
P = Principal loan amount
r = Monthly interest rate (annual rate divided by 12)
n = Total number of payments (loan term in years multiplied by 12)

This formula factors in your loan amount, interest rate, and loan term to determine your monthly payment.

Factors that affect your mortgage payment

Several factors influence your mortgage payment:

Home price and down payment: Higher down payments reduce the loan amount and monthly payment.
Interest rate: Lower rates reduce monthly payments and total interest.
Loan term: Longer terms lower monthly payments but increase the total interest paid over time.

Costs to consider beyond your mortgage payment

Owning a home involves more than just the mortgage payment. Additional costs include:

Private mortgage insurance (PMI): Required if your down payment is less than 20%.
Property taxes: Typically included in your monthly payment.
Homeowners insurance: Required to protect your investment.
Maintenance and repairs: Ongoing costs to keep your home in good condition.

How to find the best mortgage rates

Finding the best mortgage rates involves comparing offers from multiple lenders. Here’s how:

Shop around: Get quotes from banks, credit unions, and online lenders.
Check for prequalification: Many lenders offer prequalification with a soft credit pull.
Compare terms: Look at interest rates, loan terms, and fees.

Common pitfalls to avoid when taking out a mortgage

Avoid these mistakes while you’re shopping for a mortgage.

Overextending your budget

Taking on a loan that stretches your finances too thin can lead to financial stress and potential default. Here’s how to avoid this pitfall:

Create a budget: Determine how much you can comfortably afford to spend on a mortgage payment each month. Include all related expenses such as insurance, property taxes, and maintenance.
Consider total cost: Factor in the total cost of homeownership, not just the monthly payment. A lower monthly payment on a longer loan term can end up costing more in the long run due to accumulated interest.
Avoid overspending: Stick to your budget, and avoid overbidding or making an offer on a more expensive home than you can afford.

Not understanding the loan terms

Fully understanding your loan agreement is crucial to avoid surprises. Here’s what to consider:

Interest rates and APR: Know the difference between the interest rate and the annual percentage rate (APR), which includes fees and other costs.
Fees and penalties: Be aware of any fees, such as closing costs, origination fees, and late payment fees.
Loan term: Understand the length of the loan and how it affects your monthly payment and total interest paid.

Failing to negotiate

Negotiating can save you money on the home price and loan terms. Here’s how to do it:

Negotiate the home price: Focus on getting the best price for the home. For example, don’t be afraid to ask for a price reduction based on inspection results.
Shop your financing: Use preapproval offers to negotiate better loan terms with the lender.
Ask about incentives: Lenders may have incentives and rebates available that can lower the home’s price or loan terms.

How much house can I afford based on income?

To determine affordability, calculate your monthly mortgage payment using our mortgage payment calculator. Include principal, interest, taxes, and insurance (PITI) to get a comprehensive view. Banks use your debt-to-income ratio (DTI) to assess how much they’re willing to lend you. Your DTI, including PITI and other debts, should not exceed 43%.

For example, if your monthly mortgage payment is $1,000, property taxes are $500, insurance is $150, HOA fees are $50, and PMI is $20, your total housing costs would be $1,720. With a $300 car payment and $200 in student loans, total monthly obligations are $2,220. If your income is $6,000 per month, your DTI is 37%, which is considered affordable.

FAQ

Do I need to make a 20% down payment?

Traditionally, a 20% down payment was required, but many lenders now accept less. It’s possible to put down as little as 3% with some conventional loans or 3.5% with FHA loans. VA loans even allow for no down payment. However, lower down payments mean higher monthly payments and the need for PMI.

Is PMI necessary?

If your down payment is less than 20%, PMI is required to protect the lender. While VA loans and FHA loans don’t require PMI, they have other mortgage insurance costs. PMI adds to your loan cost with minimal benefit to you, except for allowing a lower down payment.

Is Mortgage Protection Insurance Worth It?

What’s the necessary credit score to get a mortgage?

Credit score requirements vary:

FHA loans: Minimum score of 580, or 500 with a larger down payment.
VA loans: Typically between 580 and 620.
USDA loans: Minimum score of 640.
Conventional loans: Minimum score of 620, with the best rates for scores of 740 or higher.

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

A 30-year mortgage offers lower monthly payments but higher total interest. A 15-year mortgage has higher monthly payments but saves on interest over time. Consider your financial situation and long-term goals when choosing.

15-Year vs. 30-Year Mortgage, 30-Year Mortgage Rates, Best Mortgage Rates

What about adjustable-rate mortgages?

ARMs start with lower rates that adjust after a set period. They can be beneficial if you plan to sell or refinance before the rate adjusts, but there’s a risk of higher payments if rates increase.

How can I pay off my mortgage early?

Making extra payments can shorten your loan term. Consider bi-weekly payments or adding extra to your monthly payment. This reduces the principal faster, saving you money on interest.

Can you use our mortgage calculator with PMI, taxes, and insurance?

Our mortgage calculator doesn’t yet allow you to include additional costs such as PMI and taxes to get a more accurate monthly payment estimate, but our team is working to add that functionality.