How to calculate mortgage payments

Using our tool, you can calculate mortgage payments by putting all your financial details into our calculator. If you’re unsure about one section, you can make assumptions. Remember that your estimates will only be as accurate as the information you provide on the calculator.

Here are just a few of the most significant factors that will impact your mortgage payments and what they mean for the overall estimate:

Home Price

This section should include the overall price of the home. This should be the price that the property is agreed to be sold at, but it may consist of only some of the costs of buying the home, like closing costs. The home price will depend on several factors, like the current housing market, the condition of the home, how old the house is, the location of the home, and more.

Loan Program

One of the most significant factors that will impact your overall payment amount is the loan provider you decide to work with. The loan program you’re eligible for will dictate the terms of your loan, from the length of it to the interest and fees you’ll be charged.

Down Payment

Another considerable factor impacting your mortgage payments is your initial down payment. Most home loans require that you make a hefty downpayment, and this works to your advantage. The more significant down payment you’re able to make, the lower amount you’ll ultimately need to borrow.

Interest Rate

When you take out a loan, you’ll have to pay to borrow that money. The fee you pay to your lender comes in the form of interest, expressed as a percentage of the overall amount you’re borrowing or still owe.

Home Insurance

Another typical cost of buying a new home is obtaining homeowner’s insurance. This insurance policy is usually dependent on the home’s price. It’s also usually charged at an annual rate. We’ve divided home insurance policy payments into monthly payments for this calculator to estimate your mortgage cost.

Property Taxes

Property taxes are also based on the home’s purchase price. You’ll want to divide your property tax amount by 12 to understand how much you’ll pay each month in property taxes.


Private mortgage insurance is usually mandatory if your loan exceeds 80% of the home’s purchase price. That’s because your lender will want insurance on their investment (your home). The cost of your private mortgage insurance policy is calculated based on the down payment you make and your overall credit score. You’ll pay into this policy monthly.

HOA Dues

Not every house is part of a homeowner’s association, but if the home you’re looking to purchase is, you’ll also need to consider the costs of HOA fees. Most of these groups collect monthly payments for maintenance, insurance, and other amenities.

Mortgage payment equation

Here is a basic equation that you can use to gauge your mortgage payments:

Total mortgage payment (monthly) = Principal + Interest + PMI + Escrow

Principal: The amount of money you borrowed

Interest: The percentage you pay on the money you borrow

PMI: The cost of private mortgage insurance

Escrow: The cost of HOA fees, property taxes, and homeowner’s insurance

Home Loan Types

One of the most significant factors impacting your mortgage rates and terms is the type of home loan you ultimately take out. Here are a few different types of mortgage options you might be considering:

Traditional Home Loan

Most homeowners take out traditional home loans from private lenders, like banks or specific mortgage-providing companies. Since private lenders offer these loans, borrowers typically undergo a lengthy qualification process. Borrowers are often expected to have pretty good credit scores, low debt-to-income ratios, and reasonably decent down payments.

VA Government-Backed Loan

If you’ve ever worked for the US military, you’ll be happy to learn that the Department of Veterans Affairs offers home loans to eligible veterans. Most of the time, these loans have no down payment, and they offer competitive rates.

USDA Government-Backed Loan

The United States Department of Agriculture also provides home loans to low-income borrowers in rural areas. Typically, these loans require borrowers to offer upfront funding, but there are few credit requirements.

FHA Government-Backed Loan

The Federal Housing Administration does offer government-backed home loans. These loans typically have far fewer requirements than traditional ones, meaning more borrowers can qualify. What’s more, they also allow for low down payments. FHA loans do require the purchase of private mortgage insurance, though.

Frequently Asked Questions

Our mortgage payment calculator can help you in many ways if you know how to use it, but you might have more questions. Get answers to some of the most frequently asked questions regarding our loan calculator, mortgages, and more.

What is a Mortgage Calculator?

A mortgage calculator is a valuable tool that can help estimate how much a borrower might expect to pay monthly on a mortgage based on various factors like the home price, loan terms, and more. Remember that mortgage calculators won’t provide you with an exact monthly payment amount, but they will give you a solid estimate on which you can make decisions.

How Do I Use a Mortgage Calculator?

To use a mortgage calculator, you’ll want to input your specific data into the calculator. If you’re unsure about some factors, you can either leave the fields blank or estimate the factor’s value. Once you’ve put in all the numbers, click the calculate button. You should get your results quickly.

What Factors Does a Mortgage Calculator Consider?

Typical mortgage calculators should consider factors like: • Your income • How long the mortgage will last • Your property taxes • Your HOA fees, utilities, and any homeowner’s insurance policies • The interest rate on the loan • The price of the home

How Accurate are Mortgage Calculators?

Our loan calculator, as well as others you’ll find online, use a variety of factors to calculate your estimated monthly mortgage payments. Still, you should never see these calculators as 100% accurate. These calculators are only as precise as the financial details you input. Moreover, some factors, including interest rates and other terms, could change as you finalize your mortgage.

How Much House Can I Afford?

So, how much home can you afford? Generally, you don’t want to buy a house when the mortgage payments exceed 30% of your overall income. Keeping within your means is very important because if you fall delinquent on your payments, then there could be consequences on your loan and home.

How Much is a Down Payment on a House?

Your downpayment on your future house will significantly affect how much you pay for your mortgage. The greater your initial payment, the lower your monthly payments will likely be. Generally, traditional loan providers want borrowers to put down at least 20%, but that’s not always necessary, depending on the lender you’re working with.

How Do You Calculate Mortgage Interest?

Our mortgage calculator does include interest rates as a factor in your monthly mortgage payments. To determine your interest payments in any given month, you’d want to take the outstanding balance of your loan and multiply it by your annual interest rate. Then, divide this number by 12 to determine the monthly interest payment you should pay that month on top of your principal balance and any other fees.

Sell Your Home

Now that you know more about your future potential mortgage payments, you’re one step closer to obtaining your dream home! Just one thing – you need to sell your existing home!

Have you caught yourself asking – how can I sell my house fast? If so, you’ll be happy to learn that we buy houses for cash. If you want to sell a house fast, we offer two unique options: Max Offer and Turbo Cash.

Our Turbo Cash program offers cash for homes even when the properties aren’t in the best condition. You won’t have to invest in your property or initiate repairs. We also operate on a zero-commission basis.

Our Max Offer program can help connect you with interested home buyers who can bid on your property, which enables you to accept a top offer.

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Learn More About Investorade

Discover more about investorade by navigating our website. Head to the About page for a deep dive into our foundation and principles. Are you curious about what sets us apart in the bustling realm of real estate? Take advantage of the investorade Difference. And for an inspiring journey of passion, determination, and success, immerse yourself in the investorade Story. Dive in and uncover the essence of all that we stand for.

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