Mortgage Calculator
Use our Mortgage Calculator to estimate your monthly mortgage payment. You can input a different home price, down payment, loan term and interest rate to see how your monthly payment changes. Our monthly payment estimates are broken down by principal, interest, property taxes and homeowners insurance. We take our calculator a step further by factoring in your credit score range, ZIP code and HOA fees to give you a more precise payment estimate. You’ll also go into the homebuying process with a more accurate picture of how to calculate mortgage payments and purchase with confidence. After you run some estimates, read on for more education and homebuying tips.
DISCLAIMER: The information found in these calculators are to be used as a guide and is deemed reliable but not guaranteed. Please schedule an appointment today to find out more information about your loan.
How a mortgage calculator can help
Buying a home is the largest purchase most people will make in their lifetime, so you should think carefully about how you’re going to finance it. Setting a budget upfront — long before you look at homes — can help you avoid falling in love with a home you can’t afford. That’s where a simple mortgage calculator like ours can help. A mortgage payment includes four components that together are known as PITI (pronounced “pity”): principal, interest, taxes and insurance. Many homebuyers know about these costs but are not prepared for are the hidden expenses of homeownership. These include homeowners association (HOA) fees, private mortgage insurance, routine maintenance, larger utility bills and major repairs.
A Mortgage Loan Calculator can help you factor in PITI and HOA fees, but not other expenses, so make sure the monthly payment it computes for you isn’t the absolute maximum of what you’ll be able to afford. It’s important to have some cushion in your budget for unexpected or emergency costs. You also can adjust your loan and down payment amounts, interest rate and loan term to see how those variables affect your monthly payment. Your specific interest rate will depend on your overall credit profile and debt-to-income ratio, or DTI, which is the sum of all of your debts and new mortgage payment divided by your gross monthly income. A lower credit score and higher DTI can make you a riskier borrower in lenders’ eyes. Generally, the riskier you seem on paper, the higher your interest rate will be.
Deciding how much house you can afford
If you’re not sure how much of your income should go toward housing, follow the tried-and-true 28/36 percent rule. Most financial advisers agree that people should spend no more than 28 percent of their gross income on housing (i.e., your mortgage payment), and no more than 36 percent of their gross income on total debt, including mortgage payments, credit cards, student loans, medical bills and the like.
Here’s an example of what this looks like:
Joe makes $60,000 a year. That’s a gross monthly income of $5,000 a month.
$5,000 x 0.28 = $1,400 total monthly mortgage payment (PITI)
Joe’s total monthly mortgage payments — including principal, interest, taxes and insurance — shouldn’t exceed $1,400 per month. That’s a maximum loan amount of roughly $253,379.
You can qualify for a mortgage with a DTI ratio of up to 50 percent for some loans, but you might not have enough wiggle room in your budget for other living expenses, retirement, emergency savings and discretionary spending if you stretch yourself too thin. Lenders don’t take those budget items into account when they preapprove you for a loan, so it’s up to you to factor those expenses into your housing affordability picture for yourself.
Knowing what you can afford can help you take financially sound next steps. The last thing you want to do is jump into a 30-year home loan that’s too expensive for your budget, even if a lender is willing to loan you the money.
