Mortgage Calculator
Estimate Your Monthly Home Payment
Buying a home is likely the largest financial decision you will ever make. Before you start looking at houses or attending open houses, you need to know exactly what you can afford. CalculatorBud’s **Mortgage Calculator** simplifies the complex math of home loans, giving you a clear picture of your monthly financial commitment.
Simply enter the home price, your down payment, and the interest rate to instantly see your estimated monthly principal and interest payment.
How a Mortgage Payment is Calculated
Your monthly check to the bank isn't just paying off the loan. A typical mortgage payment is often referred to as PITI, which stands for:
- Principal: The money that goes directly toward paying down the loan balance.
- Interest: The cost of borrowing money from the bank.
- Taxes: Property taxes charged by your local government (often bundled into your payment).
- Insurance: Homeowners insurance to protect against fire and damage.
15-Year vs. 30-Year Fixed Mortgages
One of the biggest choices you face is the "Loan Term." Should you pay it off fast (15 years) or slow (30 years)? Here is the breakdown:
| Feature | 30-Year Loan | 15-Year Loan |
|---|---|---|
| Monthly Payment | Lower (Affordable) | Higher (Aggressive) |
| Interest Rate | Usually Higher | Usually Lower |
| Total Interest Paid | High (More expensive long term) | Low (Huge Savings) |
| Building Equity | Slow | Fast |
The Power of the Down Payment
The "Down Payment" is the cash you pay upfront. Traditionally, experts recommended putting down 20% of the home price. Why?
If you put down less than 20%, lenders often charge PMI (Private Mortgage Insurance). This is an extra fee (usually 0.5% to 1% of the loan annually) that protects the bank, not you. By increasing your down payment, you lower your monthly payment, reduce total interest, and avoid PMI.
What is Amortization?
You might notice that in the early years of your mortgage, your balance doesn't seem to go down much. This is due to Amortization.
In the beginning, the majority of your payment goes toward Interest. The bank makes sure they get their profit first. As the years go by, the ratio shifts. By the end of the loan term, almost 100% of your payment goes toward the Principal.
Frequently Asked Questions
What credit score do I need for a mortgage?
Generally, you need a score of at least 620 for a conventional loan. However, FHA loans may accept scores as low as 500-580 with a larger down payment. A score above 740 usually qualifies you for the best interest rates.
Does this calculator include HOA fees?
No. If you are buying a condo or a house in a managed community, you will have Homeowners Association (HOA) fees. These are separate bills paid directly to the association, though some lenders factor them into your "Debt-to-Income" ratio.