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Estimated Payoff Date
How is my monthly payment calculated?
Principal and interest$1,216
Homeowners insurance
Property tax
Private mortgage insurance
HOA fees
Monthly Schedule
Annual Schedule
Year 1
Disclaimer: Calculator results and default inputs are estimates. Enter numbers that match your location and situation for best results. Additional data sources: Quadrant Information Services, The Tax Foundation and CoreLogic, a property data and analytics company.
The amount in this box is based on the average annual homeowners’ insurance premium for your state. To get a more accurate calculation, enter your monthly premium.
The amount in this box is based on the median property tax amount paid in your state.
A Complete Guide To Calculate Your Mortgage Payments
Home price: The agreed-upon final sales price between the buyer and seller.
Down payment: The buyer’s cash payment at closing, typically based on a percentage of the property’s final sales price. The mortgage lender deducts the down payment from the sales price and integrates what remains into the loan.
Interest rate: The percentage a lender charges on the principal amount you borrow. The rate a lender quotes is usually the annual percentage rate (APR), which includes fees, closing costs and other charges. It is, therefore, higher than the mortgage interest rate.
Loan term (years): The duration of the mortgage loan and the date by which the borrower needs to repay it.
Property tax: The recurring tax a homeowner must pay based on a home’s assessed value and local property tax rates.
Private mortgage insurance (PMI): Supplemental insurance that lenders often require of borrowers who make a down payment under 20%. PMI protects the lender against risk.
Homeowners insurance: Insurance that lenders typically require of borrowers as a condition to approve a mortgage. Homeowners insurance protects a lender’s financial investment in the property for which they provide the loan.
Homeowners association (HOA) fees: Dues that residents of a planned community or residential complex pay to an HOA board of directors to cover regular community maintenance, operations and staffing costs, services, renovation projects and amenities.
How To Calculate Mortgage Payments
Whether you’re shopping around for a mortgage or want to build an amortization table for your current loan, a mortgage calculator can offer insights into your monthly payments.
Follow these steps to use the Forbes Advisor mortgage calculator:
Enter the home price. Start by adding the total purchase price for the home you’re seeking to buy on the left side of the screen. If you don’t have a specific house in mind, you can experiment with this number to see how much house you can afford. And if you’re considering making an offer on a home, this calculator can help you determine how much you can afford to offer.
Input your down payment amount. Next, add the down payment you expect to make as either a percentage of the purchase price or as a specific amount.
Enter your interest rate. If you’ve already shopped around for a loan and have been offered a range of interest rates, enter one of those values into the interest rate box on the left. If you haven’t prequalified for an interest rate yet, you can enter the current average mortgage rate as a starting point.
Choose a loan term. To help calculate your monthly mortgage payment, enter a loan term up to a maximum of 30 years. If you haven’t been approved for a loan term and interest rate, the rate you select here should correspond with the average rate you entered above. For example, if you choose a 15-year term, use the average rate for a 15-year mortgage. If, instead, you want a balance between low monthly payments and a shorter term, you can use this portion of the calculator to compare your options.
Add in taxes, insurance and homeowners association (HOA) fees. This portion of the calculator is optional, but it can help give you a more accurate picture of your potential monthly payments. If you have the information available, plug in your monthly property tax, private mortgage insurance (PMI), homeowners insurance and HOA fees. If you don’t have these numbers in front of you, some information may be available through your real estate agent or your local property assessor’s website.
Review your loan details. Once you enter all of the relevant information on the left side of the screen, the calculator will auto-populate your payment breakdown on the right. This portion of the calculator lets you view your monthly payments as well as your estimated payoff month. Navigate to the amortization schedule tab to view how much of your annual payments will go toward interest and principal. You can also toggle between the annual and monthly view to see a breakdown of each monthly payment.
How To Break Down the Mortgage Payment Formula
The formula behind paying down a mortgage is complex, but it can be handy. It helps homeowners and would-be homeowners see what paying more money would mean for their monthly budget and their overall wealth profile.
The formula for calculating your mortgage payments is as follows:
M=P[r(1+r)n]/[(1+r)n-1]
SYMBOL
MEANING
M
Total monthly mortgage payment
P
Principal loan amount
r
Monthly interest rates (divide the annual rate by 12)
n
Number of payments over life of the loan (multiply loan term in years by 12)
A mortgage calculator has many benefits, and you can use it to:
Determine how much you’ll pay over the life of your loan
Break down your monthly payments based on the estimated sale price, down payment and interest rate
Set a price range to shop in
Compare payments on different loan types
See what your mortgage payment may look like with homeowners insurance, taxes, private mortgage insurance and/or HOA fees
These calculators are free and available online, allowing you to experiment with different scenarios and variables whenever you please.
Typical Mortgage Fees and Costs
If this is your first time shopping for a mortgage, the terminology can be intimidating. It also can be difficult to understand what you’re paying for—and why.
Here’s what to look for when reviewing your mortgage costs and fees:
Principal. Principal is the amount of money you borrowed on the mortgage. A portion of each payment will go toward paying this off, so the number will go down as you make monthly payments.
Interest rate. This is essentially what the lender is charging you to borrow the money. Your interest rate is expressed as a percentage and may be fixed or variable.
Property taxes. Property taxes are imposed by your local tax authority. This number can usually be viewed on your recorder or assessor’s website—wherever you access property cards and other real estate records.
Homeowners insurance.Homeowners insurance is required to protect you and your lender in the case of damage to your home. If you’re considering a home, ask the real estate agent if they have any information about current insurance costs. Otherwise, contact your local insurance agent to get a quote.
Mortgage insurance. Also known as private mortgage insurance—or PMI—this protects the lender in case you default on your mortgage. It typically ranges from 0.58% to 1.86% of your total mortgage amount and you will need to factor this in if your down payment is less than 20%.
HOA fees. Homeowner Association fees may be required if you buy a property in a shared community such as a condominium complex. HOAs are private organizations set up to govern and maintain such spaces. The fees may be nominal, but they might make your monthly payments unaffordable.
How much house you can afford depends on several factors, including your monthly income, existing debt service and how much you have saved for a down payment. When determining whether to approve you for a certain mortgage amount, lenders pay close attention to your debt-to-income (DTI) ratio.
Your DTI compares your total monthly debt payments to your monthly pre-tax income. In general, you shouldn’t pay more than 28% of your income to a house payment, though you may be approved with a higher percentage.
Keep in mind, however, that just because you can afford a house on paper doesn’t mean your budget can actually handle the payments. Beyond the factors your bank considers when pre-approving you for a mortgage amount, consider how much money you’ll have on-hand after you make the down payment. It’s best to have at least three months of payments in savings in case you experience financial hardship.
Along with calculating how much you expect to pay in maintenance and other house-related expenses each month, you should also consider your other financial goals. For example, if you’re planning to retire early, determine how much money you need to save or invest each month and then calculate how much you’ll have leftover to dedicate to a mortgage payment.
Ultimately, the house you can afford depends on what you’re comfortable with—just because a bank pre-approves you for a mortgage doesn’t mean you should maximize your borrowing power.
When determining how much home one can afford, what are some important costs that buyers typically overlook?
James Sias
Head of Mortgage Revenue at Fifth Third Bank
Fred Chilton
Advisory Board Member
It’s crucial as you set your budget for your new home to make sure you account for often overlooked costs above & beyond the purchase price. These expenses can often add hundreds or even thousands of dollars in additional expenses and should be factored into your overall budget.
A couple of costs that are often a surprise for new homebuyers include:
Closing costs: These costs, including loan origination expenses, title insurance, escrow, appraisal and other fees, typically run between 3-5% of the home’s purchase price.
Private mortgage insurance: If you put less than 20% down, buyers may need to purchase PMI as a requirement of their loan.
Home inspection: It’s critical to get a full home inspection done to help identify any potential issues with the property before you purchase it.
Property taxes: Buyers need to budget for property taxes today and in the future, as they have been rising in most markets in recent years.
HOA fees: If the property is located in a community with a HOA, there will be monthly or annual dues the buyer will be responsible for.
Moving costs: These are expenses related to hiring movers, renting a truck, packing supplies or even a storage unit, which can add up quickly.
Maintenance and repairs: Few homeowners often underestimate the cost of maintenance and general repairs required to keep up their property. This can include things like plumbing, electrical, appliances repair or replacement, landscaping, roofing and other general maintenance.
Being aware of these and all the other expenses associated with buying a new home can help you make the best informed and realistic decision about your new home budget.
When determining how much home one can afford, buyers often overlook several important costs outside of the standard loan origination fees. These include:
Property taxes: Property Taxes vary by location and can alter monthly payments significantly. It’s important to estimate these based on the home’s assessed value. You can also look property taxes up on the county tax assessor’s website.
Homeowners insurance: We know that homeowners insurance is part of your mortgage payment, but did you know that homeowners insurance premiums vary widely based on the home’s location, size and even the roof age?
Moving costs: These are not part of your mortgage closing costs, but if you’re purchasing a home and moving, you’ll sometimes have to shell out thousands of dollars to hire movers.
A mortgage term is the period when a mortgage is amortized—stated another way, it’s the length of time you have to pay off your mortgage. The most common mortgage terms are 15 and 30 years, though other terms also exist and may even range up to 40 years. The length of your mortgage terms dictates (in part) how much you’ll pay each month—the longer your term, the lower your monthly payment.
That said, interest rates are usually lower for 15-year mortgages than for 30-year terms, and you’ll pay more in interest over the life of a 30-year loan. To determine which mortgage term is right for you, consider how much you can afford to pay each month and how quickly you prefer to have your mortgage paid off.
Pro Tip
If you can afford to pay more each month but still don’t know which term to choose, it’s also worth considering whether you’d be able to break even—or, perhaps, save—on the interest by choosing a lower monthly payment and investing the difference.
How To Lower Your Mortgage Payment
There are a number of way you can lower your mortgage payment, such as:
Making a larger down payment
Increasing the amount of principal you pay on a monthly basis
Making a one-time lump sum payment toward your principal balance
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