How much house can I afford?

Use the 28/36 rule: your total housing costs (mortgage, taxes, insurance, HOA) should not exceed 28% of gross monthly income, and total debt payments should stay under 36%. For a $100,000 income, aim for housing costs under $2,333/month. Also consider a 20% down payment to avoid PMI.

What's the difference between APR and interest rate?

The interest rate is the annual cost of borrowing the principal loan amount. APR (Annual Percentage Rate) includes the interest rate PLUS lender fees, points, and closing costs, showing the true total cost of the loan. Always compare APRs between lenders, not just interest rates. A lower rate with high fees may cost more than a slightly higher rate with lower fees.

Should I put down 20% or less?

Putting down 20% avoids Private Mortgage Insurance (PMI), which typically costs 0.5-1% of the loan annually. However, if it depletes your savings, consider 10-15% down and pay PMI temporarily. PMI can be removed once you reach 20% equity. The math: on a $350,000 loan, PMI costs ~$175-350/month but disappears in 5-7 years with appreciation.

Is a 15-year or 30-year mortgage better?

A 15-year mortgage has lower rates (usually 0.5-0.75% less), builds equity faster, and saves massive interest (often $100,000+). However, payments are 40-50% higher. A 30-year offers lower payments and flexibility. Consider: 30-year if payments would exceed 25% of income on 15-year, or if you want to invest the difference. Many choose 30-year and make extra payments when possible.

How does my credit score affect my mortgage rate?

Credit scores significantly impact rates. Excellent (760+): best rates. Good (700-759): rates 0.25-0.5% higher. Fair (620-699): rates 1-2% higher. Below 620: may not qualify for conventional loans. On a $300,000 mortgage, each 0.5% rate increase costs ~$90/month or $32,000 over 30 years. Check your score 6+ months before applying and address any issues.

What closing costs should I expect?

Closing costs typically range from 2-5% of the home price. On a $400,000 home, expect $8,000-$20,000. This includes: origination fees (1%), appraisal ($400-700), title insurance ($1,000-2,000), attorney fees, prepaid taxes/insurance, and recording fees. Some costs are negotiable. Ask lenders for a Loan Estimate to compare total costs, not just rates.

When should I consider refinancing?

Consider refinancing when: 1) Rates drop 0.75-1% below your current rate, 2) Your credit score improved significantly, 3) You want to remove PMI, 4) You want to shorten your term (30 to 15 year). Calculate break-even: if closing costs are $6,000 and you save $200/month, break-even is 30 months. Only refinance if you'll stay past break-even.

What is included in my monthly mortgage payment?

Your monthly payment includes PITI: Principal (loan repayment), Interest (lender's fee), Taxes (property tax escrow), and Insurance (homeowner's insurance escrow). You may also pay: PMI (if under 20% down), HOA fees, and flood insurance. The P&I portion is fixed on fixed-rate loans, but taxes and insurance may change annually.

Mortgage Calculator - Free Financial Calculator

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How to Use the Mortgage Calculator

Enter your home purchase details to calculate your mortgage costs and monthly payment.

Step-by-Step Instructions

Enter the home price and your down payment amount.

Don't forget to include closing costs in your planning.

Input the interest rate and loan term.

Compare rates from multiple lenders.

Review your estimated monthly payment and amortization.

Consider how the payment fits your monthly budget.

When to Use This Calculator

When you need a quick estimate of your monthly mortgage payment.

mortgageloanmonthly paymentinterest

Who Benefits Most

•Home Buyers
•Real Estate Agents

1 min

Beginner

Understanding Your Results

Your mortgage results show the monthly cost and long-term financial impact of your home purchase.

What Each Result Means

Monthly P&I

Principal and Interest payment.

Interpretation: This is your core mortgage cost before taxes and insurance.

Total Interest

Total interest paid over the loan life.

Interpretation: Lower interest rates or shorter terms significantly reduce this number.

What to Do With Your Results

If High monthly payment:

Consider a larger down payment or a longer loan term to improve affordability.

Real-World Case Studies

See how different scenarios play out with real numbers and detailed analysis

David and Maria

34 years oldMarketing Manager and Nurse

Married couple with combined income of $145,000 looking to buy their first home in a suburban area with a budget of $450,000.

The Challenge

They need to decide between putting 20% down to avoid PMI or putting 10% down to keep more cash for emergencies and home improvements.

Starting Values

Home Price$450,000

Down Payment Options10% ($45,000) vs 20% ($90,000)

Interest Rate6.75%

Loan Term30 years

Calculation Breakdown

Calculate 10% down payment scenario

Loan = $405,000, PMI = ~$200/month

Monthly P&I: $2,627 + PMI: $200 = $2,827/month

Calculate 20% down payment scenario

Loan = $360,000, No PMI

Monthly P&I: $2,335/month (no PMI)

Calculate total cost difference over 30 years

10% down costs $177,120 more over loan life

Results

Monthly Payment (10% down)

$2,827

Including PMI

Monthly Payment (20% down)

$2,335

No PMI required

Cash Kept (10% down)

$45,000

For emergencies/improvements

Total Interest (20% down)

$480,600

Over 30 years

Projected Timeline

Year 1

Close on home, start building equity

Year 5-7

PMI removed (if 10% down option)

Year 10

Consider refinancing if rates drop 1%+

Year 30

Mortgage paid off, home fully owned

Key Insights

The 20% down payment saves $492/month and $177,120 over the loan life
However, keeping $45,000 liquid provides a safety net for home repairs and emergencies
PMI can be removed once they reach 20% equity (typically 5-7 years with appreciation)
At 24% of gross income, either option is within the 28% affordability guideline