Mortgage Calculator: Estimate Loan Payments, Taxes and PMI
Updated: April 30, 2024
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How to Use MoneyGeek’s Mortgage Calculator
Our mortgage calculator will help you understand your options when purchasing a home. The calculator simplifies the math and provides insights into your monthly payments and overall expenses to help with budgeting. Here’s how to use it to get the most accurate estimates possible:
Input the home's price
Enter the full purchase price to calculate your potential loan amount.
Enter the down payment
Input your upfront payment, in dollars or as a percentage, to determine your mortgage balance and need for PMI.
Select the loan's term
Choose the duration of your mortgage (10, 15, 20 or 30-year terms) to understand the long-term financial impact and payment schedule.
Input the interest rate
Enter your lender's annual rate to see how interest will affect your monthly payments and total loan cost.
Add in any additional fees
Input monthly or yearly amounts for property tax, homeowners insurance, private mortgage insurance (PMI) and HOA fees, if applicable. These contribute to the total monthly payment and give a realistic view of financial obligations.
Property tax is typically a percentage of the home's value. Insurance covers potential damage, PMI is required for down payments under 20% and HOA fees are applied if your property is within a homeowners' association.
Leverage the results
The calculator provides a detailed breakdown of monthly payments (principal, interest, taxes, insurance and fees) and an amortization schedule.
To make the most of this mortgage calculator, experiment with different values to see how these changes impact your monthly costs. Since it offers general estimates, it’s still best to consult a mortgage expert for personalized, accurate advice.
How to Calculate Your Mortgage Payments by Hand
While a mortgage calculator will help you determine your monthly mortgage payments, there’s no harm in knowing how to get this information with a pencil and paper. This will give you a better understanding of how the underlying factors influence what you pay out of pocket.
To calculate your mortgage payments, have the following information ready:
P = Principal loan amount (the amount borrowed) i = Monthly interest rate (your annual interest rate divided by 12) n = Number of months to repay the loan (loan term in years multiplied by 12)
Apply these values to the formula M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1], where M is your monthly mortgage payment.
You can also use the PMT formula in Excel or Google Sheets to calculator your P&I payment: =PMT(i, n, P)
Where: i = Monthly interest rate (your annual interest rate divided by 12) n = Number of payments (loan term in years multiplied by 12 months) P = Principal loan amount (with a negative number representing the amount borrowed)
Sample Scenario
You want to borrow $200,000 at an annual interest rate of 6% for 30 years.
First, convert the interest rate to a monthly rate. The 6% annual becomes 0.5% monthly (0.005 as a decimal).
Next, convert the loan term into months. Thirty years becomes 360 months (30 years x 12 months/year).
Plug these values into the formula so it appears as follows:
M = $200,000 [ 0.005(1 + 0.005)^360 ] / [ (1 + 0.005)^360 – 1] = $200,000 * (0.30 / 5.022)
That comes up to $1,194 per month, excluding any additional fees.
How a Mortgage Calculator Helps
A mortgage calculator is an excellent tool for prospective homeowners, especially when evaluating the impact of different loan terms or the potential savings from a larger down payment. Let’s explore some scenarios where using a mortgage calculator can help with financial choices.
Choosing the Right Mortgage Term for Your Budget
Meet Julia, a school teacher from Nashville who's navigating the complexities of buying her first home on a tight budget. Aware that her monthly income needs to cover not only mortgage payments but also other living expenses and savings, she's keen to make a well-informed decision that balances short-term affordability and long-term costs.
Paying Up to Pay Less
Alex is an engineer in San Diego who is in the process of buying his first home. He has saved $50,000 but is weighing how much to use for the down payment. He wants to keep enough funds for other investments and potential emergencies.
A Photographer’s Path to Financial Independence
Angel, a freelance photographer from Portland, recently inherited a small sum of money. She's considering using this unexpected windfall to make extra payments on her $300,000 mortgage. Angel dreams of financial freedom and is exploring how best to use her inheritance to decrease her long-term financial commitments.
Cutting Costs with Calculations
Marcus is an IT consultant in Austin who bought his home two years ago with a smaller down payment. As a result, he's been paying private mortgage insurance (PMI) along with his regular mortgage payments. Keen to reduce his monthly expenses, Marcus is investigating when he can eliminate this extra cost.
Strategies to Lower Your Monthly Mortgage Payments
Securing a mortgage is a long-term financial commitment, and finding ways to lower monthly mortgage payments can provide financial flexibility and security over your loan's lifetime. Here are some strategies to consider:
Frequently Asked Questions About Mortgage Calculators
We answered some common questions to enhance your understanding of mortgage calculators and equip you with the knowledge to maximize their potential.