Mortgage Calculator
Estimate your monthly mortgage payments with our free calculator. Adjust home price, down payment, interest rate, and loan term to find a payment that fits your budget.
Mortgage Summary
Understanding Mortgages: A Comprehensive Guide
A mortgage is likely the largest loan you’ll take in your lifetime. Our mortgage calculator helps you estimate monthly payments and understand the full cost of homeownership before you start house hunting.
How Mortgages Work
A mortgage is a loan secured by real property where the borrower agrees to repay the lender over time, typically in monthly installments. The home serves as collateral, meaning the lender can foreclose if payments aren’t made.
Key Mortgage Components
- Principal: The amount borrowed to purchase the home
- Interest: The cost of borrowing the money, expressed as an annual percentage rate (APR)
- Term: The length of time to repay the loan (typically 15 or 30 years)
- Down Payment: The initial payment made toward the home’s purchase price (typically 3-20%)
- Property Taxes: Annual taxes paid to local government based on home value
- Homeowners Insurance: Protection against damage to the property
- PMI: Private mortgage insurance required when down payment is less than 20%
Types of Mortgages
- Fixed-Rate Mortgage: Interest rate remains the same for the entire loan term
- Adjustable-Rate Mortgage (ARM): Interest rate changes periodically after an initial fixed period
- FHA Loans: Government-backed loans with lower down payment requirements
- VA Loans: Loans for veterans with no down payment requirement
- Jumbo Loans: For loan amounts exceeding conforming loan limits
Tips for Getting the Best Mortgage
- Check Your Credit Score: Aim for a score of 740+ for the best rates
- Save for a Down Payment: 20% avoids PMI but many programs accept less
- Compare Lenders: Get quotes from at least 3-5 lenders
- Consider Points: Paying points upfront can lower your interest rate
- Get Pre-approved: Shows sellers you’re a serious buyer
Understanding Amortization
Mortgage payments are amortized, meaning early payments go mostly toward interest while later payments go more toward principal. Our amortization schedule shows this breakdown over the life of your loan.
Hidden Costs of Homeownership
Beyond your mortgage payment, budget for:
- Property taxes (typically 1-2% of home value annually)
- Homeowners insurance ($800-$2,000/year)
- Maintenance (1-3% of home value annually)
- Utilities (often higher than renting)
- HOA fees (if applicable)
Frequently Asked Questions
How much house can I afford?
A general rule is that your total monthly housing costs shouldn’t exceed 28% of your gross monthly income. Use our calculator to test different scenarios.
What’s better: 15-year or 30-year mortgage?
15-year loans have higher payments but save significantly on interest. 30-year loans offer lower payments but cost more long-term. Compare both in our calculator.
How does my down payment affect my mortgage?
Larger down payments reduce your loan amount, may eliminate PMI, and can qualify you for better interest rates.
Should I pay points to lower my rate?
Points (1% of loan amount) buy down your rate. Calculate the break-even point to see if it makes sense for your situation.
When should I refinance my mortgage?
Consider refinancing when rates drop significantly (typically 1% or more below your current rate) or your credit score improves.
Final Thoughts
Buying a home is a major financial decision. Our mortgage calculator helps you understand the full costs and make informed choices. Remember that the lowest interest rate doesn’t always mean the best loan – consider all fees and your long-term plans.
Whether you’re a first-time homebuyer or looking to refinance, understanding your mortgage options empowers you to make the best decision for your financial future.