North Carolina Mortgage Calculator | the ascent

How do I calculate my mortgage payment?

If you have a thing for math and want to know where the numbers come from, we’ll walk you through the process. If you’re perfectly happy using our North Carolina Mortgage Calculator, feel free to skip this part. First, the three variables in the calculation:

  • Main (P): How much money you originally borrowed, not your current loan balance. If your original loan amount was $300,000, this is the principal amount you use to calculate your mortgage payment.
  • Interest rate (r): Although the loan’s APR gives you a better idea of ​​the true cost of borrowing, including things like origination fees, use the loan’s nominal interest rate to calculate your mortgage payment. Before using the mortgage formula, convert your interest rate to a decimal number. Then convert it to a monthly interest rate (because you’re calculating your monthly mortgage payment). For example, a 5% interest rate would be 0.05 in decimal form, then you would divide by 12 to get 0.00417.
  • Number of payments (n): The number of payments over the term of your mortgage. To determine this, simply take the number of years in the term of the loan and multiply it by 12. For 30 and 15 year mortgages, you will use 360 ​​and 180 monthly payments respectively.

Now that you’re familiar with the variables, here’s the formula for calculating mortgage payments:

The result of this calculation is your monthly mortgage payment, including only the principal and interest you pay. Depending on the amount of your down payment, you may also pay PMI (private mortgage insurance) and other fees. Your lender will almost certainly require you to pay a prorated amount of your property taxes and insurance with your monthly payment, and don’t forget your HOA fees, if any.

What to know before buying a home in North Carolina

Your mortgage payment isn’t the only thing to consider when buying a home in North Carolina. Here are a few more to keep in mind.

Property taxes

When it comes to property taxes, North Carolina is slightly cheaper than average. The typical North Carolina homeowner pays 0.84% ​​of their home’s value each year, so if you’re buying a $250,000 home, expect to pay around $2,100 in annual taxes. You’ll likely have to pay a few months of taxes as part of your closing costs, and your lender typically requires you to pay one-twelfth of your expected tax bill with your mortgage payment.

Insurance costs

The national average for home insurance is about $1,300 per year for $250,000 coverage. In North Carolina, the average homeowner pays just under that amount. In short, for both property taxes and home insurance, North Carolina is just a little cheaper than the national average. As with property taxes, your lender will likely require you to phase in your insurance premium with your mortgage payments and pay the annual bill on your behalf to your insurance company.

Credit score requirements

This isn’t a rule specific to North Carolina, but it’s worth mentioning. In order to get a mortgage, you must meet the minimum credit standards for the loan program you plan to apply for. For an FHA mortgage, that usually means you need a minimum score of 580, and conventional mortgages have requirements of 620 or higher, depending on your income and other qualifications.

Rental Restrictions

This deserves particular attention if you are planning to buy a second home, or if you are planning to buy a main residence and want to rent it out occasionally. Many homes, especially in areas popular with tourists like mountains or beaches, have rental restrictions that you should be aware of before buying.

Learn more: Homebuyer’s Checklist

Tips for First Time Home Buyers in North Carolina

The North Carolina Housing Finance Agency offers an excellent program for first-time buyers known as the NC Home Advantage Mortgage. Essentially, it combines fixed rate mortgages with down payment assistance programs that provide up to 5% of home value. First-time home buyers who qualify for the NC Home Advantage Mortgage can also receive down payment assistance of up to $8,000, structured as a 0% interest, deferred second mortgage eligible for full forgiveness after 15 years.

Read more: Best mortgage lenders for first-time home buyers

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