You can adjust the home price, down payment and mortgage terms to see how your monthly payment will change. You can also try our how much house I can afford calculator if you’re not sure how much money you should budget for a new home.Ī financial advisor can aid you in planning for the purchase of a home. To find a financial advisor who serves your area, try our free online matching tool. N = Number of Monthly Payments for 30-Year Mortgage (30 * 12 = 360, etc.) How to Use Our Mortgage Payment Calculator P = Principal Amount (initial loan balance) The Math Behind Our Mortgage Calculatorįor those who want to know exactly how our calculator works, we use the following formula for our mortgage calculations: #NEW YORKBASED SMARTASSET 110M TTV CAPITAL FREE# #NEW YORKBASED SMARTASSET 110M TTV CAPITAL HOW TO# The first step to determining what you’ll pay each month is providing background information about your prospective home and mortgage. There are three fields to fill in: home price, down payment and mortgage interest rate. In the dropdown box, choose your loan term. Don’t worry if you don’t have exact numbers to work with - use your best guess. The numbers can always be adjusted later.įor a more detailed monthly payment calculation, click the dropdown for “Taxes, Insurance & HOA Fees.” Here, you can fill out the home location, annual property taxes, annual homeowners insurance and monthly HOA or condo fees, if applicable. 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. The number you’re left with is your DTI.ĭTI = Total Monthly Debt Payments ÷ Gross Monthly Income x 100 Down Payment Next, divide by your monthly, pre-tax income. In general, a 20% down payment is what most mortgage lenders expect for a conventional loan with no private mortgage insurance (PMI). 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% to 5%. The table below shows how the size of your down payment will affect your monthly mortgage payment. *The payment is principal and interest only. To get the total monthly payment for down payments below 20%, add in your property taxes, homeowners insurance and private mortgage insurance (PMI). In general, most homebuyers should aim to have 20% of their desired home price saved before applying for a mortgage.
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