Total Interest Paid
Total Cost of Loan
Your dream house may turn into a nightmare if your mortgage payment doesn’t quite fit your budget. Whether you want to buy or refinance a home, our mortgage calculator takes the guesswork out of estimating how much you will pay each month. Here is how it works:
- Enter a loan amount. To calculate this figure, subtract your down payment from the home’s purchase price.
- Choose a loan term. A 30-year fixed-rate mortgage is a popular choice among homebuyers because it allows you to split a lower monthly payment over a longer period of time. That said, a shorter repayment term will cost you less in interest charges over the life of the home loan.
- Estimate your interest rate. Research mortgage rates to get a better idea of the current rate environment. Your interest rate will depend on the type of loan you have, such as FHA or conventional, as well as the repayment length, the loan amount, the loan-to-value ratio and your creditworthiness.
- Select “calculate” to see your estimated monthly payment. This calculator shows your monthly principal and interest paid to the lender.
- Account for other expenses. Once you have your estimated payment, factor in other costs associated with buying a home, like homeowners association fees and expenses that may be held in an escrow account, like property taxes and homeowners insurance. If you make a down payment of less than 20%, you will typically have to pay for private mortgage insurance.
- Play around with the figures. If you’re looking to keep your mortgage payment below a certain dollar amount, you can change the loan terms. For example, finding a home at a lower purchase price or coming prepared with a larger down payment can help you lower your monthly payment.
The 30-year fixed mortgage rate rose to 6.81% during the first week of 2023. Average interest rates increased across the board for fixed- and adjustable-rate home loan products, with the exception of FHA loans, which decreased slightly.
Mortgage interest rates are twice as high as they were at the beginning of 2022 and higher borrowing costs are having a tangible impact on mortgage affordability and consumer housing sentiment. Here are the current mortgage rates, without discount points unless otherwise noted, as of Jan. 5:
- 30-year fixed: 6.81% (up from 6.73% a week ago).
- 20-year fixed: 6.44% (up from 6.14% a week ago).
- 15-year fixed: 5.96% (up from 5.82% a week ago).
- 10-year fixed: 6.01% (up from 5.79% a week ago).
- 5/1 ARM: 5.49% (up from 5.42% a week ago).
- 7/1 ARM: 5.62% (up from 5.54% a week ago).
- 10/1 ARM: 6.02% (up from 5.97% a week ago).
- 30-year jumbo loans: 6.85% (up from 6.8% a week ago).
- 30-year FHA loans: 5.99% with 0.25 point (down from 6.2% a week ago).
- VA purchase loans: 6.03% with 0.07 point (up from 5.98% a week ago).
Principal. This is the amount of money you borrowed from the lender to buy your house. A portion of your monthly payment goes toward repaying the principal balance of your loan, which lowers your debt amount.
Interest. Interest payments go directly to the lender, and they won’t lower your principal amount. Your mortgage rate determines how much money you’re paying the lender to finance your loan.
Property tax. Property taxes are typically paid annually or biannually, but they can be rolled into your monthly payments through an escrow account. The amount you pay in property taxes may increase over time if your local tax rate increases or your assessed property value rises.
Homeowners insurance. This type of insurance provides financial protection in a disaster or accident involving your home. Your monthly mortgage payment will usually include a portion of your biannual or annual insurance premium that goes into an escrow account, and your lender pays your insurance when it’s due.
Private mortgage insurance. PMI protects the lender if you stop making payments on your loan. It’s required for a conventional loan with a down payment of less than 20% of the home’s purchase price – or equity of less than 20% of the value of your home for a conventional loan refinance.
A mortgage calculator can give you an idea of how much house you can buy. You will also need to look at certain factors to decide whether a home could be within your financial reach.
Assess your monthly earnings, cash reserves and expenses as well as your credit profile, which helps show what your mortgage interest rate could be.
Lenders suggest using a percentage of your income as a guideline for how much house you can afford. The 28/36 rule states that you should spend no more than 28% of your gross monthly income on housing expenses and no more than 36% on total debts.
Our calculator allows you to tinker with the numbers to figure out what’s comfortable and avoid financial stress. Also, whatever you can do to improve your credit before you shop for homes and lenders will help. The higher your credit score, the lower your interest rate and the more affordable your monthly payments will be.
Take a good, hard look at your budget. Make sure that you’ve accounted for all of your monthly expenses, with room to spare.
You’ll also want to leave yourself a savings cushion for home upgrades and repairs.
Your budget should be solid before you begin to look at – and fall in love with – homes you can’t afford. You can start on your own with our calculator and then speak to a mortgage professional for further guidance.
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