When you’re in the market to buy a home, figuring out your mortgage payment beforehand will help determine how much house you can afford based on what fits into your budget.
Using the calculator below, you can see how much your mortgage payment will be based on factors such as your loan amount, annual taxes, HOA fees, PMI, and interest rate.
How to Use The Mortgage Calculator
Enter the following information to find out what your monthly mortgage payment will be:
- Home Value: The agreed upon purchase price for the home.
- Loan Amount: How much money you intend to borrow. This is typically the purchase price of the house minus your down payment. Some lenders will let you roll your closing costs into your loan if you choose to.
- Interest Rate: The annual interest rate for your mortgage. With a fixed mortgage, this doesn’t change over the term of your mortgage unless you refinance at a later date.
- Mortgage Term: How many years the mortgage is for. Most commonly, mortgages are 15-years or 30-years, but other terms exist.
- Annual Taxes: The expected amount of money you’ll pay annually towards property taxes and any other taxes where you’ll live.
- Annual Insurance: The expected cost for homeowner’s insurance on your new house.
- Monthly HOA Fees: If you’ll be living where there’s an HOA, enter the monthly HOA fees here.
- Annual PMI: Typically, you can leave this alone unless your lender tells you what percent your PMI will be. Private mortgage insurance (PMI) is typically paid when you put less than 20% down on your down payment.
How This Mortgage Calculator Can Help
Clean Cut Finance’s mortgage calculator helps you determine your mortgage payment which lets you know if you’re purchasing a house that fits your budget. You can use the calculator to find ways to lower your payment which can be done by increasing your down payment, buying a less expensive house, or getting a better interest rate.
You can determine what term is right for you, such as a 15-year mortgage or a 30-year mortgage. You can also experiment with different down payment amounts to see how much you need to put upfront to be comfortable with your monthly mortgage payment.
It’s possible that you’re buying too much home, and having Clean Cut Finance’s mortgage calculator at your disposal allows you to use different home values and loan amounts to find the right fit for you.
What Costs Are Associated With Mortgage Payments?
Some mortgages only include principal and interest, but many mortgages also tie in other monthly costs. Below are different monthly costs that may be associated with your mortgage.
- Principal: The principal is how much money you’re borrowing. When you make a mortgage payment, your principal is reduced. When the principal is reduced to zero, your mortgage is paid off.
- Interest: Interest is money you pay to your lender as a fee for them to lend you money.
- Property taxes: Property taxes are taxes that your local government, such as your town or city, charges you. When you pay your property taxes as part of your mortgage, you pay 1/12th of the annual taxes per month into an escrow account, and your loan servicer pays the taxes when your bill comes in.
- Homeowners insurance: Homeowners insurance covers loss related to fire, storms, theft, and other conditions. Similar to property taxes, you’ll pay 1/12th of your annual homeowners insurance premium each month into escrow, and when your bill is due, your loan servicer will pay your insurance company from your escrow account.
- PMI (mortgage insurance): If your down payment is less than 20% of the purchase price of the home, you’ll typically pay PMI. PMI protects the lender in case the borrower defaults on their mortgage. You only pay PMI until your equity in your home increases to 20% unless you have an FHA loan.
HOA fees are generally not included in a mortgage payment however, Clean Cut Finance’s mortgage calculator includes them so that you have a better idea of your total monthly payment.
How Can I Get My Mortgage Payment Down?
You have options to reduce your monthly mortgage payment before you purchase a home.
- Choose a mortgage with a longer term: A mortgage with a longer term will lower your monthly mortgage payment, but you’ll pay more interest over the lifetime of the loan. You may also get quoted at a higher interest rate, depending on the lender.
- Buy a less expensive house: When you buy a less expensive house, you’ll borrow less money meaning your monthly mortgage payment is lower.
- Put down more down payment: When you put down 20% or more of a down payment, you’ll avoid paying PMI. Additionally, the more down payment you put down, the less money you borrow, which lowers your monthly payment.
- Improve your credit score: When you have a better credit score, you’ll typically be eligible for lower interest rate mortgages. Getting quoted at even half a percent less interest rate over a 30 year mortgage can save you significantly in interest payments over the lifetime of the loan.