# Mortgage Calculator | Estimated Payments

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Figuring out how much you will pay for your mortgage is a key step in the home buying process and will help you determine how much debt you can handle responsibly.

To get your monthly payment estimate, enter the price of the house, the loan term, the interest rate, and your down payment. You can also factor in other costs, such as homeowners association fees, home insurance, and property taxes.

By adjusting the different inputs, you can also see how a change in a factor – like the length of your loan or a lower interest rate – will affect your monthly payments. And if you already have a mortgage, this tool can also help you decide if it’s a good idea to refinance.

## How do I calculate my mortgage payment?

If you’d rather do a bit of the math yourself, you can use paper and pencil to calculate your mortgage payment with this equation:

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

Here’s what it all means:

M = Mortgage payment

P = Principal amount or dollar value of your loan

r = Monthly interest rate (to get the correct number, take your annual interest rate and divide it by 12)

n = Number of payments over the term of your loan (multiply the years of your mortgage by 12 to get the number of monthly payments you will make)

## How can a mortgage calculator help me?

A mortgage calculator is a great place to start your home buying process because it can help you determine your budget. But it’s a useful tool for more than that. It can also help you determine what type of loan is best for you.

Some conventional loans have smaller down payment requirements – as little as 3% down payment. But there are ongoing costs associated with paying less up front. If you put less than 20%, which means your loan to value ratio (LTV) is greater than 80%, you will have to pay for private mortgage insurance. And with less skin in the game, you can also pay a higher interest rate. Our mortgage payment calculator can help you assess the benefit of a larger down payment.

## Decide how much house you can afford

There is an important distinction between how much you can borrow to buy a home and how much you can afford. One of the factors that lenders consider when determining how much they are willing to let you borrow is your debt-to-income ratio (DTI). Your DTI shows how much of your monthly income is needed to pay off your debts. Most mortgages require a DTI of 43% or less, although depending on the type of loan and your credit score, you may qualify for a mortgage with an DTI of over 50%.

If your monthly income is \$ 4,000, you may qualify for a mortgage with a monthly payment of \$ 2,000 if you have no other debt. But whether it is affordable depends on your financial situation. Buying a home comes with the risk that other expenses will arise beyond your monthly payment. Replacing a furnace or water heater can cost thousands of dollars, and property taxes or insurance costs can go up.

It is therefore prudent not to borrow the maximum amount, especially if you do not have a well-stocked emergency fund beforehand. Even if you qualify for a mortgage with a monthly payment of 43% or 50% of your income, many experts recommend a DTI ratio of 36% or less. Not only that, but lenders like that borrowers also have a lower DTI because it is less risky for them. Having a lower DTI will also help you qualify for a lower mortgage rate.

## Understanding your mortgage payment

Your mortgage payment isn’t just what you pay each month for your loan principal balance. It also includes interest, taxes and home insurance. There are also other costs that could be added, depending on the type of loan you have or how much you put in for a down payment. Mortgage loan insurance is an additional expense that you will have to pay on some government guaranteed loans and on most conventional loans when your LTV is below 80%. This insurance usually costs 0.5 and 1% of the loan amount each year, so it can add a lot to your monthly payments.

Apart from your mortgage payment, homeowners also have other expenses to pay, such as homeowner’s association dues. You will also want to set aside funds for regular maintenance and unscheduled repairs to the house. You might even be forced to pay higher utilities, compared to renting, if your rent includes water, sewer, and garbage.

## Next Steps To Getting A Mortgage

The NextAdvisor mortgage calculator is a useful tool for estimating your monthly mortgage payments. But to get the full picture, you will need to talk to a mortgage lender. Before you bid on a home, you’ll need to get pre-approved for a mortgage, which will give you a good estimate of how much you can borrow. But you won’t know exactly how much your monthly payment will be until you submit an application for a specific property. This is because costs like property taxes and home insurance depend on the house and its location.

Learn more about home loans with our mortgage guides and compare mortgage rates for different types of loans below:

## Mortgage calculator Alternative uses

A mortgage calculator is a useful tool to see how much you will be paying each month. But it can also help you find the right kind of mortgage or decide if you want to pay extra on your current mortgage.

Prepay your mortgage early: You can enter additional monthly payments, annual payments or one-time payments under the â€œamortization scheduleâ€ tab of our mortgage calculator. This makes it easy to see how quickly you can pay off your mortgage and how much interest you will save.

When you will be get rid of private mortgage insurance (PMI): For the typical conventional mortgage, you will need 20% of the equity in the home to be able to lower the PMI. Examining our mortgage calculator’s amortization schedule allows you to see exactly when you will reach 20% equity, regardless of changes in house prices.

Choose the mortgage term that’s right for you: Once you’ve entered your down payment and the price of your home, it’s easy to see how changing your loan repayment term will affect your monthly payment. Shorter term loans will have higher monthly payments, but usually come with lower interest rates.

Compare the amount of interest you will pay: To see the total amount of interest you will pay, enter your mortgage details and click on the â€œAmortization Scheduleâ€ tab. The table below shows the amount of interest you will pay each month and, at the bottom, the total amount of interest. When you change the term of your loan or take additional payments into account, interest is automatically recalculated.