Mortgage Calculator 2022
The Ascent’s mortgage calculator helps you understand how much a home loan will cost. It also makes it easy to compare loan options. To use the calculator, plug in:
You can also put in the cost of home insurance, property taxes, and homeowners association (HOA) fees, if you know them. This will provide a more accurate estimate.
A good mortgage calculator takes into account all the monthly costs that go into a mortgage payment. These costs are added together to estimate your total monthly payments as well as the interest cost you’ll pay over time.
Here’s how a mortgage calculator determines your payment amount:
The added-together principal, interest, property taxes, HOA costs, home insurance fees, and mortgage insurance reveal your total monthly payment. If you opted for the 30-year loan mentioned above, this would mean adding up:
The calculator would show your total monthly mortgage payment at $1,829.
It’s important to understand all the inputs the calculator uses to determine your monthly and total costs.
This is the amount you are paying for the home. If you’ve made an offer to buy a house for $300,000, the home price would be $300,000.
The down payment is the amount of money you put down on the property at closing. Ideally, this will be at least 20% of the home’s purchase price because you can qualify for a more affordable loan and get a broader choice of lenders if you put 20% down. Lenders do let you put down much less in some cases — as low as 3%, or even $0 with certain loans (such as VA loans).
Consider the amount of cash available to you to determine your down payment. If you have $30,000 available for this use, you’d be putting 10% down on your $300,000 loan.
The down payment is subtracted from the home’s purchase price to determine the amount of money you borrow from your mortgage lender.
Interest is the rate you pay to borrow. Your interest rate is based on national averages and economic conditions, as well as individual financial credentials such as your credit score and your debt relative to your income. Your loan type and choice of lender also factor into your interest rate.
The higher the interest rate, the more financing charges you pay your lender over time. A higher rate also leads to larger monthly payments.
There are several kinds of mortgages, including 30-year, 20-year, and 15-year loans. Your loan type affects monthly payments and total costs.
A loan with a longer payoff time typically has a higher interest rate. Since you pay more in financing charges and pay interest for longer, it’s more expensive than a loan with a shorter payoff period. However, the monthly payments are lower. Because you aren’t making as many payments, loans with shorter payoff times have higher monthly payments — despite the lower rate and lower total costs.
Homeowners insurance is required by lenders. Lenders require this because the home serves as collateral for the loan. The cost to insure a property is based on many factors, including its value, the type of insurance, and the level of risk. For example, homes in an area prone to earthquakes typically cost more to insure.
It’s a good idea to compare insurance quotes from several carriers to find the most affordable coverage.
Lenders typically collect monthly payments (as part of your overall mortgage payment) for home insurance and keep the money in an escrow account. For example, if your insurance is $1,200 per year, your insurer adds $100 onto your mortgage payment. The money is kept in a special account, then your insurance bill is sent to your lender, who pays it out of that account annually.
Property tax is paid to local and state governments. The amount of property tax depends where you live. It’s usually expressed as a percentage of your home’s value. Property tax payments are also collected by your lender as part of your monthly mortgage payments and put into escrow until your lender pays your property tax bill once per year.
If your home is part of an association, then HOA fees are factored into monthly housing costs as well. Associations collect dues to maintain common areas and provide other services.
Our mortgage calculator can help you make informed decisions about your loan, including:
If you get quotes from several mortgage or refinance lenders, you can also use the calculator to see how much each loan costs.
The results of the mortgage calculator can help you determine how much a particular loan will cost each month. Using the calculator, you can compare loan types and determine, for instance, if you prefer a 15-year or 30-year loan, based on total costs and monthly payments.
You can also make sure the mortgage payments fit into your budget. If your total payment would be $1,829 with all costs added in, you can assess whether this is a comfortable amount to pay.
After using the mortgage calculator, you’re ready to make informed choices about home-buying. Consider taking these next steps.
Work on improving your financial credentials to increase the odds you can qualify for a mortgage loan at a competitive rate. This could mean paying down debt or improving your credit score.
You can use the mortgage calculator to decide if you want a 30-, 20-, or 15-year loan based on the monthly payments and total loan costs for each loan type.
Apply with several lenders to get preliminary rate quotes. You can input the interest rates and terms each lender offers into the calculator to see which lender offers the best loan.
After narrowing your options to one lender, submit your financial information to complete the pre-approval process. Lenders will assess your details and tell you how much you can borrow, at what rate. You lock in your loan rate during this process.
While you aren’t 100% guaranteed to get the loan you’re pre-approved for, you should get final approval under the agreed-upon terms as long as nothing changes financially, and the home you’re buying is approved by the lender.
After getting pre-approved, you can make an offer on a home. When that offer is accepted, you’ll go through the appraisal and inspection process. Once the home checks out and your lender reviews your financial credentials again, you close on your home loan.
To qualify for a mortgage or refinance, shop around with several lenders. When you find the best rates and terms, make sure you meet the lender’s requirements for income, debt, and credit score.
You’ll then provide information on your finances, so gather documents such as pay stubs and bank statements. Once you’ve found the right loan and have your paperwork ready, submit an application. For more information, or if you’re ready to go, use our form to guide you through the process and get a mortgage pre-approval.
Yes. Most lenders look at your credit report and score when determining if you qualify for a home loan. However, some lenders work with borrowers who don’t have a credit history. They can review other documentation, such as utility statements, showing you have a history of making on-time payments.
Shop around for a lender that does manual underwriting and prepare financial documentation such as bank statements. Find out more in this guide to how to buy a house with no credit.
Your monthly mortgage payment includes:
The type of mortgage you should choose depends on many factors, including your credit history, your down payment amount, the type of house you’re buying, and your goals for your loan. For example, you may wish to choose a:
These are just a few examples of different home loans. Research all the mortgage types before you decide.
To begin the process of buying a home, set a budget to ensure you’re prepared to qualify for a home loan and pay a mortgage. Prepare the financial documents that mortgage lenders will want to review. Get quotes from several lenders, and pursue mortgage pre-approval from the one offering the best terms.
You may want to hire a real estate agent to help you shop for properties. When you find a home that fits your budget and criteria, make an offer, including any contingencies or conditions that must be met, such as a satisfactory inspection. Complete the formal loan approval process for the mortgage loan that best fits your needs, and close on your transaction.
This home-buyer checklist provides more insight into each of these steps, so check it out before you shop for a property.
Ideally, you will make a down payment equal to 20% of the value of the property. So if you’re buying a $200,000 home, save $40,000.
However, many people don’t save this much for a down payment. You could qualify for a conventional loan (not backed by the government) with as little as 3% down. Some government-backed loans don’t require a down payment at all. But if you don’t make a down payment or make a small one, expect to pay mortgage insurance or other upfront fees.
Whether you plan to save 20% or not, look into how to save for a down payment.
To apply for a mortgage, you need:
Lenders may also request additional information, so read more details in our full guide to what documents are required for home loans.
Expenses of homeownership to prepare for include:
You can learn more about all these costs in our guide to homeownership expenses.
With a 15-year loan, you make payments for just 15 years, as opposed to 30. The monthly amount you owe is higher on a 15-year loan than a 30-year loan because you make fewer payments. The interest rate is usually lower on a 15-year loan. And total interest costs are lower, because you pay interest for less time.
Carefully consider the pros and cons of a 15- vs. 30-year mortgage when you decide which is right for you. Additionally, you can explore 20- vs. 30-year mortgages.
Some of the best tips for first-time home buyers include:
For more information, look at our first-time home-buyer tips.
Lenders consider your debt-to-income ratio when you apply for a mortgage because they want to know you can afford mortgage payments. They look at your:
If either ratio is too high, a lender won’t approve your loan. For more information about lender requirements, read up on debt-to-income ratio and why it matters.
A higher credit score can result in a lower mortgage rate, since lenders view you as a low-risk borrower. A lower mortgage rate means lower monthly payments and less total interest paid over time.
A credit score on the low end can make it difficult to get approved for a loan. And lenders that do approve a mortgage will charge a higher rate. That’s because credit problems suggest a greater chance a borrower will default on a loan.
Find out more about this by looking into how credit scores affect mortgage rates.
If you want to uncover more about the best mortgage lenders for low rates and fees, our experts have created a shortlist of the top mortgage companies. Some of our experts have even used these lenders themselves to cut their costs.
Christy Bieber is a full-time personal finance and legal writer with more than a decade of experience. She has a JD from UCLA as well as a degree in English, Media and Communications with a Certificate in Business Management from the University of Rochester. In addition to writing for The Ascent and The Motley Fool, her work has also been featured regularly on MSN Money, CNBC, and USA Today. She also ghost writes textbooks, serves as a subject matter expert for online course design, and is a former college instructor.
We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team. The Motley Fool has a