Mortgage Calculator

Use our mortgage calculator to calculate how much your mortgage will be per month. You will also see the Amortization Schedule, allowing you to see what you’re actually paying when getting approved for your mortgage. Our free online mortgage calculator is designed to look great on all mobile devices and with visual clarity in mind. It’s easy to use, and you will get the payment amount instantly.

How to Use the Mortgage Calculator

1. Enter the Home Price:
   Start by entering the total price of the home you want to purchase. This amount represents the overall cost of the property before any down payment.
2. Input the Down Payment:
   Enter the amount you plan to pay upfront as a down payment. The down payment is subtracted from the home price to calculate the loan amount. If you do not have an exact number in mind, you can leave this field blank or set it to zero.
3. Provide the Annual Interest Rate:
   Input the annual interest rate offered by your lender. The rate should be entered as a percentage. For example, if your interest rate is 4.5%, type "4.5" in the field.
4. Specify the Loan Term:
   Enter the term of the loan in years. Most mortgage terms are 15 or 30 years, but the calculator works for any loan duration.
5. Click "Calculate":
   Once you have filled in all the fields, press the "Calculate" button. The mortgage calculator will immediately compute your monthly payment, the total loan cost, and the total interest you will pay over the loan's lifetime.
6. Review the Amortization Schedule:
   The amortization schedule shows the breakdown of each monthly payment into principal and interest. It also includes the remaining loan balance after each payment, helping you see how much you owe over time.

Formula Used in the Mortgage Calculator

The mortgage calculator uses the standard loan amortization formula to compute your monthly payment:

M = P × [r(1 + r)^n] / [(1 + r)^n - 1]

Where:

• M: Monthly mortgage payment
• P: Loan amount (home price minus down payment)
• r: Monthly interest rate (annual rate divided by 12)
• n: Total number of payments (loan term in years multiplied by 12)

Example Calculation:

If the loan amount is $300,000, the annual interest rate is 4.5%, and the loan term is 30 years:

1. Convert the annual interest rate to a monthly rate: 4.5% ÷ 12 = 0.00375
2. Calculate the total number of payments: 30 × 12 = 360
3. Use the formula to find the monthly payment:
   M = 300,000 × [0.00375(1 + 0.00375)^360] / [(1 + 0.00375)^360 - 1]
   The monthly payment will be approximately $1,520.06.

Why the Amortization Schedule Matters

The amortization schedule helps you understand how each payment is distributed between the loan principal and interest. Early payments contribute more toward interest, while later payments contribute more toward the principal. Many people, including myself, don't see how big these number are until we actually see them on the screen.

By using this mortgage calculator, you can determine your monthly payment, understand how interest affects your loan, and plan your finances with clarity.

Different Types of Mortgage Loans

There are several types of mortgage loans available, here’s a breakdown of the most common mortgage loan types:

1. Fixed-Rate Mortgages

Fixed-rate mortgages are the most common type of home loan. They offer a consistent interest rate for the entire loan term, which is typically 15, 20, or 30 years.

• The monthly payments remain the same throughout the loan.
• This type of loan is ideal for borrowers who want long-term stability and predictable payments.

2. Adjustable-Rate Mortgages (ARMs)

Adjustable-rate mortgages have an interest rate that changes periodically based on market conditions.

• ARMs typically start with a lower fixed rate for a set period (e.g., 5, 7, or 10 years), followed by annual adjustments.
• The adjustments are tied to a benchmark index, such as the U.S. Prime Rate.
• Borrowers face the risk of higher payments if interest rates increase after the fixed period.

3. FHA Loans

FHA loans are insured by the Federal Housing Administration and are popular among first-time homebuyers.

• They require a down payment as low as 3.5%.
• Borrowers with lower credit scores can qualify for FHA loans.
• FHA loans include mortgage insurance premiums (MIP), which add to the monthly cost.

4. VA Loans

VA loans are available to eligible veterans, active-duty military members, and their families.

• These loans are backed by the Department of Veterans Affairs.
• VA loans require no down payment and have no private mortgage insurance (PMI).
• Borrowers often benefit from competitive interest rates and lower closing costs.

5. USDA Loans

USDA loans are backed by the U.S. Department of Agriculture and are designed for rural and suburban homebuyers.

• These loans require no down payment.
• They are available to low-to-moderate-income borrowers.
• Borrowers must meet specific income and property location requirements.

6. Jumbo Loans

Jumbo loans are used for properties that exceed conforming loan limits set by Fannie Mae and Freddie Mac.

• The 2024 conforming loan limit for most areas is $726,200.
• Jumbo loans often require higher credit scores and larger down payments.
• These loans usually come with higher interest rates due to their size.

7. Interest-Only Mortgages

Interest-only mortgages allow borrowers to pay only the interest for a set period (usually 5–10 years).

• After the interest-only period, borrowers must start paying both principal and interest.
• Monthly payments increase significantly once the principal payments begin.
• These loans are typically used by high-income borrowers or those with irregular income streams.

8. Balloon Mortgages

Balloon mortgages require borrowers to make small payments for a set period (e.g., 5 or 7 years), followed by a large lump-sum payment for the remaining balance.

• These loans are riskier because the borrower must either pay off the loan or refinance at the end of the term.
• Balloon mortgages are often used in commercial real estate or by buyers who plan to sell the property before the balloon payment is due.

9. Conventional Mortgages

Conventional mortgages are not backed by a government agency.

• They are available through private lenders and banks.
• Borrowers typically need a credit score of 620 or higher.
• Down payments can range from 3% to 20%, depending on the lender.

10. Home Equity Loans and HELOCs

Home equity loans and home equity lines of credit (HELOCs) allow homeowners to borrow against the equity they’ve built in their property.

• Home equity loans provide a lump sum at a fixed interest rate.
• HELOCs work as a revolving line of credit with variable interest rates.
• These loans are often used for home improvements or large expenses.

Understanding the different types of mortgage loans can help borrowers select the one that best fits their financial situation and long-term goals. Each loan type comes with its own terms, requirements, and benefits, so careful consideration is crucial when choosing a mortgage.

Why Use the Mortgage Calculator

Getting a mortgage also means understanding the long-term financial commitment you're making. Over the course of a 30-year loan, the total amount paid in interest can sometimes equal or exceed the original loan amount. For example, a $300,000 loan at a 4.5% interest rate can result in more than $247,000 in interest over 30 years. This is why it's critical to understand your loan terms, shop around for the best interest rates, and consider the total cost of the mortgage, not just the monthly payment.

Making biweekly payments instead of monthly payments is another strategy that can significantly reduce the life of your loan and the amount you pay in interest. By splitting your monthly payment in half and making 26 payments a year instead of 12, you effectively make one extra full payment annually. This approach not only shortens your loan term but also saves you thousands of dollars in interest over time.

Lastly, it's essential to consider other costs associated with homeownership, such as property taxes, homeowners insurance, and maintenance. These expenses are often overlooked but can add up quickly. In our case with insurance and other home expenses like energy bills it can add up to over $1000 a month. I always pay those fees a month in advance so I have some leeway.

Mortgage Facts

Mortgages are the backbone of homeownership for millions of people. They come with a lot of important details that can impact your financial future. Here are some key mortgage facts every homeowner or buyer should understand.

The average mortgage term in the U.S. is 30 years. However, 15-year mortgages are also popular for those who want to pay off their homes faster.

Your credit score plays a huge role in determining your mortgage interest rate. A higher score typically means a lower rate, which can save you thousands over the life of the loan.

In 2024, the average interest rate for a 30-year fixed-rate mortgage is around 6.5%. This rate can vary depending on the economy and your financial profile.

In Canada the max term for a loan is 25 years, however thanks to inflation and a bad economy, the government is approving 30-year mortgage loans to new home owners.

If your down payment is less than 20%, most lenders will require private mortgage insurance (PMI). PMI adds to your monthly payment but protects the lender in case you default.

Making extra payments toward your mortgage principal can shorten the loan term. It can also save you thousands in interest payments.

FHA loans are a great option for first-time buyers. They require as little as 3.5% for a down payment, making homeownership more accessible.

Debt-to-income ratio is a major factor in mortgage approval. Most lenders require a DTI ratio under 43% to qualify for a loan.

Your monthly mortgage payment often includes more than just the loan itself. Property taxes, homeowners insurance, and sometimes HOA fees are bundled into your payment.

Adjustable-rate mortgages (ARMs) offer a lower initial rate but can increase over time. Fixed-rate mortgages, on the other hand, keep the same rate for the life of the loan.

Paying biweekly instead of monthly can help you pay off your loan faster. It effectively adds one extra payment per year, which reduces your loan term.

Mortgage points can lower your interest rate. These are upfront fees you pay at closing to reduce your long-term costs.

If you're a veteran, VA loans can offer significant benefits. They require no down payment and no PMI, saving you a lot of money.

Refinancing can lower your monthly payment or interest rate. However, it often comes with closing costs, so weigh the benefits carefully.

An amortization schedule breaks down each payment into principal and interest. Early payments go mostly toward interest, while later payments pay off more of the principal.

Jumbo loans are used for homes that exceed conforming loan limits. These loans often have stricter requirements due to their size.

Pre-approval can make you a stronger buyer. Sellers are more likely to accept your offer when you’re pre-approved for a mortgage.

Property taxes can vary widely by location. High property taxes can significantly increase your total monthly payment.

Home equity loans let you borrow against the value of your home. They can be useful for renovations or other large expenses.

More millennials are entering the housing market. In 2023, nearly 50% of first-time buyers were millennials.

Final Thoughts

Getting a mortgage is a once-in-a-lifetime decision, and you should do proper research to ensure you can afford it. Use a mortgage calculator like ours to get a clear view of how much your payment could be based on the area you live in.

It is highly rewarding to have a home paid off. Personally, I plan to pay ours off within the next 10 years and then focus on retirement after that. It will be much more comfortable to retire knowing your home is fully paid for.