Mortgage Calculator - Free Home Loan Payment Calculator with Affordability Analysis
Mortgage Calculator
Adjust the loan parameters on the left and click the "Calculate" button to view your personalized mortgage analysis
Understanding Your Mortgage Payment
What is PITI?
Your monthly mortgage payment typically includes four components:
What is PMI?
Private Mortgage Insurance (PMI) is typically required when your down payment is less than 20%.
âšī¸ Note: PMI requirements may vary by region and lender
Affordability Guidelines
Financial experts recommend following these rules:
How to Save Money
Smart strategies to reduce your mortgage costs:
- âIncrease down payment to 20% to eliminate PMI
- âChoose a shorter loan term (15 vs 30 years)
- âMake extra principal payments monthly
- âShop around for the best interest rates
- âConsider bi-weekly payments instead of monthly
Advanced Calculator Features
Professional mortgage analysis beyond basic calculations
âšī¸Regional Considerations
Mortgage terms and requirements vary by region. This calculator uses common mortgage principles, but specific policies may differ based on your location.
Requirements typically range from 3% to 50% depending on loan type and region
PMI, CMHC, or other mortgage insurance may be required for low down payments
Common loan terms range from 10 to 35 years depending on local regulations
đĄ Tip: Always consult with local lenders for specific requirements in your area
What is a Mortgage?
A mortgage is a loan secured by property, usually real estate. Lenders define it as the money borrowed to pay for real estate. In essence, the lender helps the buyer pay the seller of a house, and the buyer agrees to repay the money borrowed over a period of time, usually 15 or 30 years.
Each month, a payment is made from buyer to lender. A portion of the monthly payment is called the principal, which is the original amount borrowed. The other portion is the interest, which is the cost paid to the lender for using the money. There may be an escrow account involved to cover the cost of property taxes and insurance.
đĄ Did you know? The buyer cannot be considered the full owner of the mortgaged property until the last monthly payment is made. The most common mortgage loan is the conventional 30-year fixed-interest loan, representing 70% to 90% of all mortgages.
Mortgage Calculator Components
Loan Amount
The amount borrowed from a lender or bank. In a mortgage, this equals the purchase price minus any down payment. The maximum loan amount typically correlates with household income and affordability.
Down Payment
The upfront payment of the purchase, usually a percentage of the total price. Lenders typically want 20% or more. If less than 20%, PMI is usually required. Higher down payments often mean better interest rates and loan approval odds.
Loan Term
The amount of time to repay the loan in full. Most fixed-rate mortgages are 15, 20, or 30 years. Shorter periods typically include lower interest rates but higher monthly payments.
Interest Rate
The percentage charged as borrowing cost. Fixed-rate mortgages (FRM) keep the same rate throughout, while adjustable-rate mortgages (ARM) start lower but can change based on market conditions.
Costs Associated with Home Ownership
Recurring Costs
Most recurring costs persist throughout and beyond the life of a mortgage. They are significant financial factors that increase over time due to inflation.
Taxes paid to governing authorities, usually managed by municipal or county governments. Varies by location.
Protects the owner from accidents and property damage. May include personal liability coverage for injuries on/off the property.
Fees imposed by homeowner's associations for maintaining common areas and amenities. Common in condos and townhomes.
General upkeep, repairs, utilities, and maintenance. Commonly 1% or more of property value annually.
Non-Recurring Costs
Attorney fees, title service, recording fee, appraisal, inspection, points, and more. Can be significant ($10,000+ on a $400,000 transaction).
Flooring, painting, kitchen updates, or complete overhauls. Optional but can add up quickly.
New furniture, appliances, moving costs, and initial repairs.
Early Repayment and Extra Payments
Many mortgage borrowers want to pay off mortgages earlier to save on interest, sell their home, or refinance. Our calculator can factor in monthly, annual, or one-time extra payments. However, understand both advantages and disadvantages.
Three Main Strategies
Make additional payments beyond the monthly requirement. Decreases loan balance, reduces interest, and shortens loan term.
Pay half the monthly payment every two weeks. Results in 26 payments (13 months) per year, reducing interest and loan term.
Take out a new loan with a shorter term (e.g., 15 years). Lower interest rate but higher monthly payments.
â Advantages
- âĸLower interest costs: Save thousands in interest over the loan term
- âĸShorter repayment period: Own your home faster
- âĸPersonal satisfaction: Freedom from debt obligations
â ī¸ Drawbacks
- âĸPrepayment penalties: Some loans charge fees for early payoff
- âĸOpportunity costs: Could invest money elsewhere for higher returns
- âĸCapital locked up: Money put in house can't be spent elsewhere
- âĸLoss of tax deduction: Lower interest means less tax deduction
Frequently Asked Questions
What is PITI in a mortgage payment?
PITI stands for Principal, Interest, Taxes, and Insurance. These are the four main components of your monthly mortgage payment. Principal is the amount borrowed, Interest is the cost of borrowing, Taxes are property taxes paid to local government, and Insurance is homeowners insurance to protect your investment.
What is PMI and when is it required?
Private Mortgage Insurance (PMI) is typically required when your down payment is less than 20% of the home's purchase price. PMI costs between 0.5% to 1.5% of the loan amount annually, which translates to $50-$200+ per month. PMI can be removed once you reach 20% equity in your home.
How much house can I afford?
Financial experts recommend that housing costs shouldn't exceed 28% of your gross monthly income (front-end ratio), and total debt shouldn't exceed 36% of gross monthly income (back-end ratio). These are general guidelines, and your specific affordability depends on your income, debts, credit score, and down payment amount.
Should I choose a 15-year or 30-year mortgage?
A 15-year mortgage has higher monthly payments but lower interest rates and significantly less total interest paid over the life of the loan. A 30-year mortgage offers lower monthly payments, providing more flexibility in your budget, but you'll pay more interest over time. Choose based on your financial goals, monthly budget, and long-term plans.
How can I save money on my mortgage?
You can save money on your mortgage through several strategies:
- Increase your down payment to 20% to eliminate PMI
- Choose a shorter loan term (15 vs 30 years)
- Make extra principal payments monthly or annually
- Shop around for the best interest rates from multiple lenders
- Consider bi-weekly payments instead of monthly payments