Mortgage Payment Calculator
Calculating arithmetic underlying mortgage payments can be very challenging, especially if you are new to the mortgage game. With Freedom Capital’s mortgage calculator you can easily determine what house you can afford given various inputs. You can choose the length of the mortgage, interest rate, down payment, and whether to include any taxes, fees, or insurance in the monthly cost.
How To Use A Mortgage Payment Calculator?
First enter the Mortgage Amount. This is the total amount of your mortgage. Remember to subtract your down-payment from the price of the property you intent to purchase. This does not include closing costs like legal fees.
You will then see “Length of loan.” Choose the length, which might be 25, 20, 15, or 10 years, and our calculator will change the payback schedule.
Finally, enter the rate you anticipate paying in the “Interest rate” box. You can change the percentage in our calculator; the default value is the current average rate. Depending on whether you’re buying or refinancing, your rate will change.
Typical costs included in a mortgage payment
The major part of your mortgage payment is the principal and the interest. The principal is the amount you borrowed, while the interest is the sum you pay the lender for borrowing it. Your lender also might collect an extra amount every month to put into escrow, money that the lender (or servicer) then typically pays directly to the local property tax collector.
- Principal: This is the amount you borrowed from the lender.
- Interest: This is what the lender charges you to lend you the money. Interest rates are expressed as an annual percentage.
- Property taxes: Local authorities assess an annual tax on your property. If you have an escrow account, you pay about one-twelfth of your annual tax bill with each monthly mortgage payment.
- Mortgage insurance: If your down payment is less than 20 percent of the home’s purchase price, you’ll probably be on the hook for mortgage insurance, which also is added to your monthly payment.
How a Mortgage calculator can help
As you set your housing budget, determining your monthly house payment is crucial — it will probably be your largest recurring expense. As you shop for a purchase or a refinance, Bankrate’s Mortgage Calculator allows you to estimate your mortgage payment. To study various scenarios, just change the details you enter into the calculator. The calculator can help you decide:
- The mortgage amortization that’s right for you. If your budget is fixed, a 30-year fixed-rate mortgage is probably the right call. These loans come with lower monthly payments, although you’ll pay more interest during the course of the loan. If you have some room in your budget, a 15-year fixed-rate mortgage reduces the total interest you’ll pay, but your monthly payment will be higher.
- If an ARM is a good option. As rates rise, it might be tempting to choose an adjustable-rate mortgage (ARM). Initial rates for ARMs are typically lower than those for their conventional counterparts. A 5/6 ARM — which carries a fixed rate for five years, then adjusts every six months — might be the right choice if you plan to stay in your home for just a few years. However, pay close attention to how much your monthly mortgage payment can change when the introductory rate expires.
- If you’re spending more than you can afford. The Mortgage Calculator provides an overview of how much you can expect to pay each month, including taxes and insurance.
- How much to put down? While 20 percent is thought of as the standard down payment, it’s not required. Many borrowers put down as little as 10 percent.
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 39/44 percent rule. Many financial advisors believe that you should not spend more than 39 percent of your gross income on housing costs, such as rent or a mortgage payment, and that you should not spend more than 44 percent of your gross income on overall debt, including mortgage payments, credit cards, student loans, medical bills and the like.