Mortgage Calculator | Money

Use Money’s mortgage calculator below to estimate your monthly payments based on home value, current loan rates and loan type.

You can also use the calculator to check how much you’ll pay based on your credit score and how much you’ve saved up for a down payment. Enter your information, view the results and find out how much housing you can afford.

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Mortgage calculator

Mortgage calculator guide

Our mortgage calculator allows home buyers to see how different factors – purchase price, credit score, interest rate and down payment size – affect their total payment to help determine how much real estate they can comfortably afford.

If you’re looking for a new home, remember that loan rates change daily and vary by lender, so use this loan calculator to get a ballpark estimate, and ask for quotes from multiple lenders. (Best mortgage lenders are a good place to start your search.)

Once you start looking for a home, get pre-approved so you can move quickly if you find one you want to bid on. Your initial mortgage balance will be the purchase price of the home minus your down payment.

How to calculate your mortgage payment

Three main factors determine your monthly loan payment: loan size, interest rate and loan term. Your credit score and the location of your home will also affect your interest rate and, in turn, how much you pay.

Additional costs such as home owner association (HOA) fees, closing costs, property taxes and homeowners insurance should be included in your monthly housing costs.

A formula for calculating your monthly mortgage payments

While our calculator takes computing off your hands, math whizzes can do it themselves with the following formula:

M = P*[(i/12*(1+i/12)n)]/[(1+i/12)n-1]

M – your monthly mortgage payment

P – principal loan amount

i – the monthly interest rate, which must be divided by twelve (corresponding to the months of the year) as lenders give an annual rate

n – the number of payments over the life of the loan (number of years), or the repayment schedule. For example, for a 30-year mortgage, n would be 360 ​​payments (12 payments per year for 30 years, or 12*30).

What factors affect your mortgage payments

Down payment

Putting 20% ​​down allows you to avoid paying private mortgage insurance (PMI). More equity also gives you more financing options down the road.

However, the lowest payment rate can be 15%, and it is possible to secure a loan with a down payment of up to 3%.

With our calculator, you can enter the portion of the home cost you plan to pay upfront as a percentage or dollar amount.

Interest rate

The interest on the loan is calculated monthly and is part of your annual percentage rate, or APR, which includes the fees you have to pay the bank to borrow the money.

Our calculator automatically populates itself with a loan rate based on the information you enter, but you can override this to see how rate changes may affect your costs.

Zip code

Your location can affect the amount of the loan. Although loan rates are often calculated using national rates, rates vary by location.

Type of loan

The most common mortgage is a 30-year fixed-rate loanbut some people choose a 15-year loan to pay off the debt quickly or variable loans for security. flat rate. In most states, if the loan amount is more than $832,759, you will need to take out a jumbo loan.

Credit score

Estimate your credit life. Credit scores range from fair (580-669) to good (670-739), excellent (740-799) and excellent (800 and above). Anything below 580 is considered a bad score.

How to lower your monthly mortgage payment

Struggling to pay your mortgage? There are many reasons why you may need to lower your monthly mortgage payments. Maybe you were ambitious when buying your house, have other big financial goals, or are in a financial situation that has taken a turn for the worse.

Whatever the reason, here are some ways to lower your payments and free up more room in your budget.

Removing PMI

Private mortgage insurance, also called PMI, is a policy that protects lenders from defaulting on a borrower’s loan. With a conventional loan, the borrower’s down payment must exceed 20% of the home’s value to avoid PMI. Government-backed loans, such as VA or FHA loans are not included in this, although they still come in similar funds.

Borrowers can call their lender to request a PMI waiver once they reach 20% of their home equity. To accomplish this, you can make regular additional payments or lump sum payments towards the mortgage principal to reach that 20% soon. You can also try to reduce PMI by refinancing or remodeling your home.

Refinancing

Refinancing your mortgage means replacing your existing home loan with a new one from your current lender or another lender. This loan may offer a lower total interest rate and new terms that better match your financial goals.

There are two main ways to lower your monthly payments by refinancing. The first is to take advantage of low interest rates, which may depend on when you took out your mortgage. The second is to extend the term of the loan, which extends your payments but runs the risk of leaving you with a lot of debt for a long time.

Buying mortgage points

Home mortgage points can be an ideal solution for paying off a high mortgage, as they can only be “purchased” before taking out a loan. When you buy mortgage points, you are paying the lender to lower your interest rate, which will lower your monthly mortgage payments over the life of the loan.

Buying points isn’t an option for everyone, but it’s worth considering if you intend to keep the property for a long time.

Selling and buying an affordable home

Refinancing may not be enough to bring your monthly payment down to an acceptable number. If the weight of your mortgage is too much for you to carry, consider selling your home and buying an affordable one instead.

Remember that this option should be reserved for the worst case scenario where your inability to pay could put you at risk of defaulting on your loan. You will need to invest time, money and energy in the process of selling your current home, buying another one, and moving into your new home.

How to find out how much house you can afford

Understanding your budget limits is important before contacting any lending institution. Doing so will help you stay realistic and avoid risky purchases—even if it’s your dream home—that could set you back in the future.

To find out how much you can afford, you’ll need to enter your down payment, situation, credit score and the type of home loan you’re interested in.

You will also need to show the amount of your monthly payments or the sum of your monthly income and monthly debts. The last two are used to determine your credit-to-income ratio, which plays a big role in whether you’ll be able to borrow in the first place.

Most lenders and calculators assess affordability using the 28/36 rule, which ensures that your housing costs and total debt should not be more than 28% and 36% of your gross pre-tax income, respectively. To calculate this, multiply your monthly income by 28 or 36 and divide by 100.

For example, with a monthly income of $4,500, you should spend no more than $1,260 on monthly housing costs. The formula to calculate this will be x = (a × 28) ÷ 100, where ua is your monthly income (1,260 = [4,500 × 28] ÷ 100).