# Mortgage Calculator

### Use our mortgage calculator to estimate your monthly mortgage payment.

You can input a different home price, down payment, loan term, and interest rate to see how your monthly payment changes.

Our monthly payment estimates can include additional payment options to give you a more precise payment estimate including:

• Interest,
• Property taxes, and,
• Homeowners insurance.

Using our mortgage calculator gives you a competitive advantage headed into the home-buying process with a more accurate picture of your mortgage payments and purchase with confidence.

After you run some estimates, read on for more education on mortgage rates, insurance, and home-buying tips.

# Mortgage Calculator

### How do I calculate my mortgage payment?

Step 1: Under “Home price,” enter the price (if you’re buying) or the current value (if you’re refinancing).

Step 2: Under “Mortgage term,” click the plus and minus signs to adjust the length of the mortgage in years.

Step 3: Under “Down payment,” enter the amount of the down payment (if you’re buying) or the amount of equity you have (if refinancing).

Step 4: Under “Annual Taxes” enter the previous year’s annual estimated taxes.

Step 5: Under “Interest rate”, enter the estimated mortgage interest rate.

Step 6: Under “Homeowner’s Insurance” enter the estimated annual home insurance premium. If you’re not sure, click here.

Step 7: Under “Monthly HOA Fees” enter the homeowners’ association fee expense for your community if one exists.

ALL DONE!

## How Are Mortgage Payments Calculated?

Want to figure out how much your monthly mortgage payment will be? If you’re into math, here’s a formula to help you calculate mortgage payments manually:

### Mortgage Payment Equation

M = P[r(1+r)^n/((1+r)^n)-1)]

• M = the total monthly mortgage payment.
• P = the principal loan amount.
• r = your monthly interest rate. Lenders provide you an annual rate so you’ll need to divide that figure by 12 (the number of months in a year) to get the monthly rate. If your interest rate is 5%, your monthly rate would be 0.004167 (0.05/12=0.004167)
• n = number of payments over the loan’s lifetime. Multiply the number of years in your loan term by 12 (the number of months in a year) to get the number of payments for your loan. For example, a 30-year fixed mortgage would have 360 payments (30×12=360)

This formula can help you crunch the numbers to see how much house you can afford. Using Rogue Risk’s tool to calculate your mortgage payments can take the work out of it for you and help you decide whether you’re putting enough money down or if you need to adjust your loan term. It’s always a good idea to rate-shop with several lenders to ensure you’re getting the best deal available.

### Mortgage Calculator Terms Defined

#### Home Price

Let’s break it down further. Home price, the first input, is based on your income, monthly debt payment, credit score and down payment savings. A percentage you may hear when buying a home is the 36% rule. The rule states that you should aim to for a debt-to-income (DTI) ratio of roughly 36% or less (or 43% maximum for a FHA loan) when applying for a mortgage loan. This ratio helps your lender understand your financial capacity to pay your mortgage each month. The higher the ratio, the less likely it is that you can afford the mortgage.

To calculate your DTI, add all your monthly debt payments, such as credit card debt, student loans, alimony or child support, auto loans and projected mortgage payments. Next, divide by your monthly, pre-tax income. To get a percentage, multiple by 100. The number you’re left with is your DTI.

DTI = Total monthly debt payments ÷ gross monthly income x 100.

#### Down Payment

In general, a 20% down payment is what most mortgage lenders expect for a conventional loan with no private mortgage insurance (PMI). Of course, there are exceptions. For example, VA loans don’t require down payments and FHA loans often allow as low as a 3% down payment (but do come with a version of mortgage insurance). Additionally, some lenders have programs offering mortgages with down payments as low as 3% – 5%. The table below shows how the size of your down payment will affect your monthly mortgage payment.

#### How a Larger Down Payment Impacts Monthly Payments

Percentage Down Payment Home Price Principal & Interest
20% \$40,000 \$200,000 \$804
15% \$30,000 \$200,000 \$854
10% \$20,000 \$200,000 \$905
5% \$12,500 \$200,000 \$955
0% \$0 \$200,000 \$1,005

*The payment is principal and interest only; to get the total monthly payment, add your property taxes, homeowners insurance and private mortgage insurance (PMI) for down payments below 20%.

In general, most homebuyers should aim to have 20% of their desired home price saved before applying for a mortgage. Being able to make a sizeable down payment improves your chances of qualifying for the best mortgage rates. Your credit score and income are two additional factors that will play a role in determining your mortgage rate.

#### Interest Rate

For the mortgage rate box, you can see what you’d qualify for with our mortgage rates comparison tool. Or, you can use the interest rate a potential lender gave you when you went through the preapproval process or spoke with a mortgage broker. If you don’t have an idea of what you’d qualify for, you can always put an estimated rate by using the current rate trends found on our site or on your lender’s mortgage page. Remember, your actual mortgage rate is based on a number of factors, including your credit score and debt-to-income ratio.

#### Mortgage Term

In the drop down area, you have the option of selecting a 30-year fixed-rate mortgage, 15-year fixed-rate mortgage or 5/1 ARM. The first two options, as their name indicates, are fixed-rate loans. This means your interest rate and monthly payments stay the same over the course of the entire loan. An ARM, or adjustable-rate mortgage, has an interest rate that will change after an initial fixed-rate period. An ARM’s interest rate will change once a year following the introductory period. Depending on the economic climate, your rate can increase or decrease. Most people choose 30-year fixed-rate loans, but if you’re planning on moving in a few years or flipping the house, an ARM can offer you a lower initial rate.

#### Homeowner’s Insurance

Home insurance is generally a requirement to secure a home mortgage loan. The premium is usually included with the monthly mortgage payment. Costs and coverage vary by state and the value of the home. At Rogue Risk, we make sure you have the proper coverage. Get a home insurance quote today.

Homeowner’s insurance can cover the cost to repair or rebuild due to damage caused by events like fire, windstorms, hail, lightning, theft or vandalism. It can also protect your possessions inside your home like clothes, furniture and electronics.

#### Monthly HOA Fees

Fees due in exchange for being part of a homeowner’s association. A homeowner’s association is an organization in a planned community that maintains and reinforces rules for the properties in its jurisdiction. By purchasing a property in such a community, the homeowner is agreeing to the HOA’s rules and fees. HOAs maintain a significant amount of legal power over property owners regarding the outside conditions of the home.

#### Annual Taxes

Taxes levied based on the government’s appraisal of your property. These are usually included as part of your monthly mortgage payment. Property taxes vary greatly depending on location and home price. National state averages range from 0.32% to 2.31%

## Mortgage Payment Questions

What costs are included in a monthly mortgage payment?

If your mortgage payment included just principal and interest, you could use a bare-bones mortgage calculator. But most mortgage payments include other charges as well. Here are the key components of the monthly mortgage payment:

• Principal: This is the amount you borrow. Each mortgage payment reduces the principal you owe.
• Interest: What the lender charges you to lend you the money. Interest rates are expressed as an annual percentage.
• Property taxes: The annual tax assessed by a government authority on your home and land. You pay about one-twelfth of your annual tax bill with each mortgage payment, and the servicer saves them in an escrow account. When the taxes are due, the loan servicer pays them.
• Homeowners insurance: Your policy covers damage and financial losses from fire, storms, theft, a tree falling on your house and other bad things. As with property taxes, you pay roughly one-twelfth of your annual premium each month, and the servicer pays the bill when it's due.
• Mortgage insurance: If your down payment is less than 20% of the home’s purchase price, you’ll likely pay mortgage insurance. It protects the lender’s interest in case a borrower defaults on a mortgage. Once the equity in your property increases to 20%, the mortgage insurance is canceled, unless you have an FHA loan.

Typically, when you belong to a homeowners association, the dues are billed directly, and it's not added to the monthly mortgage payment. Because HOA dues can be easy to forget, they're included in Rogue Risk's mortgage calculator.

Can I reduce my monthly mortgage payment?

The mortgage calculator lets you test scenarios to see how you can reduce the monthly payments:

• Extend the term (the number of years it will take to pay off the loan). With a longer term, your payment will be lower but you’ll pay more interest over the years. Review your amortization schedule to see the impact of extending your loan.
• Buy less house. Taking out a smaller loan means a smaller monthly mortgage payment.
• Avoid paying PMI. With a down payment of 20% or more, you won’t have to pay private mortgage insurance. Similarly, keeping at least 20% equity in the home lets you avoid PMI when you refinance.
• Get a lower interest rate. Making a larger down payment can not only let you avoid PMI, but reduce your interest rate, too. That means a lower monthly mortgage payment.
Can my monthly mortgage payment go up?

Yes, your monthly payment can go up over time:

1. If property taxes or homeowners insurance premiums rise. These costs are included in most mortgage payments.
2. If you incur a late payment fee from your mortgage loan servicer.
3. If you have an adjustable-rate mortgage and the rate rises at the adjustment period.
What will be included in my mortgage payment?

Here’s what the typical monthly mortgage payment includes:

• Principal
• Interest
• Homeowner's insurance
• Property taxes
• Private mortgage insurance (PMI), if you put less than 20% down on your home

If you want to pay more on your mortgage, be sure to specify you want any extra money to go toward the principal only, not an advance payment that prepays interest.

What happens when I qualify for a mortgage loan?

To begin the mortgage process, you’ll need to meet with a lender and be prepared to provide proof of:

• Where you work
• Any debt you have
• How much you plan to put down on your home

It’s likely your lender will approve you for more money than you should borrow. Just because you qualify for a big loan doesn't mean you can afford it!

A good lender will clearly explain your mortgage options and answer all your questions so you feel confident in your decision. If they don’t, find a new lender. A mortgage is a huge financial commitment, and you should never sign up for something you don’t understand!

If you’re ready to get prequalified for a mortgage loan, we recommend talking to Jim Cardinal at Homeowners Advantage.

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