Financial Calculators
Home Loan Calculator

# Home Loan Calculator

This easy home loan calculator will help you calculate monthly mortgage payments. The mortgage calculator is perfect for both fixed-rate or adjustable-rate home loans.

Tax, Insurance, PMI, HOA

Result

Monthly Payment: $1,816.92 Property Tax:$144,000.00

Home Insurance: $36,000.00 Total Out-of-Pocket:$834,091.20

Each monthly mortgage payment includes a specific amount that goes straight to the loan’s principal balance. Mortgages are structured, so the principal payments begin low and increase with each completed payment. Hence, payments made over the first several years have more applied toward interest than the principal, and the opposite is true at the end of your term. In the example, the principal amount is $100,000. ### Interest The lender charges interest to reward themselves for taking the risk to loan you the money. This rate directly impacts the amount a borrower pays each month. The higher the interest rate, the higher the monthly mortgage payments. It’s vital to mention that higher interest rates will reduce the overall amount you can borrow, while lower rates will increase the amount. For our example, let’s say the interest rate on the$100,000 principal is 6 percent. The combined interest and principal on a 30-year loan would be right around $600, depending on your location. However, if the$100,000 loan had a 9 percent interest rate, the monthly mortgage payment would be closer to $800. ### Taxes Property or real estate taxes are also assessed by the local government and used to fund public programs such as police, schools, and fire departments. These taxes are assessed yearly, but you can pay them monthly in your mortgage payments. The amount you owe should be divided by the number of payments you will make in one year. Your lender will collect and deposit the payments into escrow until the taxes are due. ### Insurance The last factor that impacts your mortgage payment is insurance, which is handled similarly to property taxes. With this, you should understand that two forms of insurance may be included in your mortgage amortization schedule. The first type is property insurance, which protects the property and belongings from disasters such as theft or fire. The other type of insurance is PMI, which is mandatory for anyone purchasing a home with less than 20 percent down. This insurance is in place to protect the lender if the borrower cannot repay the loan. Since this insurance decreases the risk of default on the loan, PMI allows lenders to sell the mortgage to investors. The PMI ensures that the investor’s debt investment will be recovered. The coverage can be dropped after the borrower’s home has a minimum of 20% equity. Though Interest, principal, taxes, and insurance account for most mortgages, you can opt for a home loan that does not include insurance or taxes as part of the payment. Remember that while your monthly payments are lower, you are still responsible for paying the insurance and taxes. ## How to Find the Best Mortgage Credit unions, banks, and loan and savings institutions used to be some of the only places to secure home loans. Today, there are many mortgage lenders to choose from, including nonbanks. When shopping for the best mortgage, be sure to use a free mortgage calculator to help compare estimated payments based on the mortgage type, down payment, and interest rate. It’s also a great tool to help you decide how much home you can comfortably afford. Aside from the interest and principal, the mortgage servicer or lender may also open an escrow account to pay property insurance, taxes, and other expenses. These costs are added to your monthly loan payments. Ultimately, shopping around is the easiest way to find the best mortgage. After you use the amortization calculator to see how much house you can afford, you must find a lender who will offer a loan within those limits. ## How to Qualify for a Mortgage Lenders check several vital factors to determine if a person can qualify for a home loan. Here are the questions you should ask yourself before applying for a mortgage: • Do you have what is considered a “good” credit score? • Have you recently filed for bankruptcy or had a foreclosure? • Do you have a lot of monthly debt already? • Does your credit history contain collections or many late payments? • Are your credit cards maxed? Saying yes to just one of these factors does not automatically count you out. For example, with a credit score, some home loan types allow you to have as low as 580. However, if you’ve answered yes to multiple questions on the list, it may be best to work on those points before applying with a lender. ## Important Mortgage Terminology to Know An online mortgage loan calculator will help estimate your monthly mortgage payments with little information. To effectively use the calculator, here is some terminology you should know: • Home Price: The dollar amount you’ll need to pay for the house. • Down Payment: The money given to the home’s seller. • Loan Amount: The amount that will be financed to buy the home. You deduct the down payment amount from the home price to find this number. • Loan Term: The length of time your mortgage will last. • Interest Rate: The amount paid to the lender for allowing you to borrow the money. ## Example of Calculating a Mortgage in the U.S. Let’s suppose that the home you want to buy is$100,000. The lender offers you a loan for 30 years at 6 percent interest. To determine your monthly mortgage payments, use the free mortgage calculator and input this data:

• Purchase Price: $100,000 • Down Payment: We used 20% for our example • Mortgage Term: 30-year fixed-rate • Zip Code: We used 90005 for our example As you’ll see, the monthly payment on an$80,000 loan would be \$622.90.