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Simple Mortgage Calculator

Not sure how much house you can afford? Running the numbers for your next investment property? Our mortgage calculator is a quick and easy way to determine your monthly payments.

Calculator Results

Total Monthly Payment:
Monthly Principal + Interest (P&I)
Monthly Taxes
Monthly Insurance

%

Use of this calculator signifies your agreement to our Terms of Use and the terms posted below.

Understanding Mortgage Payments

What is a Mortgage Payment?

A mortgage payment is the amount of money a homeowner pays each month to their lender to repay the loan used to purchase their home. This monthly payment typically includes several components: principal, interest, taxes, and insurance, commonly referred to as PITI. Additionally, if your down payment is less than 20% of the home's purchase price, you may need to pay for private mortgage insurance (PMI).

Are you just starting to consider buying a home? Knowing what you can afford can be difficult before your lender approves your loan—understanding how the PITI elements of a mortgage payment work is crucial for managing your finances effectively. Calculating your PITI will also ensure an accurate deal analysis for cash flow if you buy an investment property.

If you need help finding a lender, BiggerPockets can point you in the right direction: Our free Lender Finder can find investor-friendly lenders specializing in funding your unique real estate strategy.

Types of Mortgages and Home Loans

Mortgages and Home Loans contract

Conventional Loans

A conventional loan is a mortgage that is not guaranteed or insured by any government agency, including the Federal Housing Administration (FHA) or the Department of Veterans Affairs (VA). It is typically fixed in its terms and rate. Conventional loans are often favored by borrowers with strong credit histories and stable financial backgrounds, as they can offer competitive interest rates and flexible loan terms.

Adjustable-Rate Mortgage (ARM)

Adjustable rate mortgages (ARMs) allow borrowers to pay lower interest rates on their loan for a set period, after which the rates will change. For example, a 7/1 ARM means that the borrower's interest rate will remain fixed for 7 years—and after this initial period, the interest rate adjusts annually. ARMs are particularly attractive to borrowers who plan to sell or refinance their home before the fixed-rate period ends, as they can benefit from the lower initial interest rates.

Fixed-Rate Mortgages

Fixed-rate mortgages have a consistent total monthly payment for principal and interest. Over time, the composition of these payments changes due to amortization. Initially, a larger portion of the payment goes towards interest. As more principal is paid off, the interest component decreases, and more of the monthly payment contributes to the loan balance. Fixed-rate mortgages can be especially beneficial in a low-interest-rate environment, allowing homeowners to lock in a favorable rate for the loan term.

Federal Housing Authority (FHA) Loans

An FHA loan is a mortgage insured by the Federal Housing Administration. It is especially popular among first-time home buyers because it allows down payments of only 3.5% for credit scores of 580 or higher. While FHA loans have lenient credit score requirements and low down payment allowances, borrowers must pay additional mortgage insurance premiums, which protect the lender if a borrower defaults.

HomeReady Loan

HomeReady mortgages are a line of conventional home loans offered by Fannie Mae to help low- and moderate-income borrowers buy or refinance. HomeReady mortgages allow for a down payment as low as 3%, which can be a significant advantage for those who may not have substantial savings. The program permits income from non-borrower household members to be considered in the loan application, which can help applicants qualify for a larger loan amount.

Hard Money Loan (HML)

A hard money loan is an asset-based loan typically issued by private investors or companies. These loans are often used for short-term financing, especially in real estate transactions. They are popular among real estate investors who need quick access to capital for property purchases, renovations, or to bridge financial gaps. Due to their higher risk, hard money loans usually come with higher interest rates and shorter loan terms, making them more expensive than traditional loans.

Veteran Affairs Loan (VA)

VA-guaranteed loans are offered by private lenders, such as banks or mortgage companies, to eligible veterans to purchase a home that must be used as their residence. The guarantee protects the lender from loss if the borrower or a subsequent owner fails to repay the loan. These loans provide significant benefits to veterans, including no down payment requirement, competitive interest rates, and limited closing costs.

Personal Loans

A personal or private mortgage is a loan made by an individual or business that is not a traditional mortgage lender. Private mortgages can offer more flexibility than conventional loans, as they often have fewer bureaucratic hurdles and can be tailored to fit the unique needs of both the borrower and the lender. However, it's crucial to carefully consider the terms of a private mortgage, as they may include higher interest rates or shorter loan terms compared to traditional loans.

Factors Affecting Mortgage Payments

Home ownership, homebuying, real estate

Home Price and Down Payment

The price of the property and down payment are two significant factors that affect your mortgage payments. The home price determines the loan amount you need to borrow, while the down payment affects the loan-to-value (LTV) ratio. A higher down payment leads to a lower monthly payment because it reduces the loan amount.

Private mortgage insurance (PMI) is typically required for borrowers who make a down payment of less than 20% of the home's purchase price. This insurance is designed to protect the mortgage lender in case the borrower defaults on the loan. PMI is generally calculated as a percentage of the original loan amount and is added to the monthly mortgage payments. Once the borrower's equity in the home reaches 20%, they can typically request the removal of PMI , potentially reducing their monthly payments.

Mortgage Rate and Loan Term

Lower interest rates reduce monthly mortgage payments and total loan costs. With lower rates, more of your payment goes toward the principal rather than interest. Additionally, the mortgage term impacts monthly payments and interest paid: longer terms (like 30-year mortgages) mean lower payments but more total interest, while shorter terms (like 15-year mortgages) offer higher payments with less overall interest and quicker equity buildup.

What is the Formula Used to Calculate Monthly Mortgage Payments

The variables of a mortgage payment formula are:

  • Principal (P): The amount of money borrowed from the lender.
  • Interest Rate (i): The percentage of the principal charged by the lender for borrowing the money. It is usually expressed as an annual percentage rate (APR), but for mortgage calculations, it is divided by 12 to get the monthly interest rate.
  • Loan Term (n): The time over which the loan is to be repaid. It is usually expressed in years, but for mortgage calculations, it is converted to the total number of monthly payments.
  • Monthly Mortgage Payment (M): The amount of money that needs to be paid each month to repay the loan.

For those of you who like crunching numbers instead of using our handy mortgage calculator, the formula looks like this:

M = P
i (1 + i)n
(1 + i)n - 1

What Are The Costs of a Mortgage Payment?

Homebuying, real estate, homeownership

To get more specific about what the costs are in a mortgage, here's what each cost means:

  • Principal:This is the money you borrowed to buy the property. Each mortgage payment reduces the principal amount owed.
  • Interest:This is the cost of borrowing money from a lender. The interest rate is determined by several factors, including your credit score, the size of your down payment, the type of mortgage you choose, and the macroeconomic environment.
  • Property taxes:These are taxes that your local government assesses on the value of your property. In many cases, your mortgage lender will collect these taxes as part of your monthly mortgage payment and pay them on your behalf through an escrow account. Property tax rates can vary depending on location and are calculated as a percentage of your home's value, funding local services.
  • Homeowner's insurance:This is insurance that protects your property against damage or loss. Your lender may require you to purchase homeowner's insurance as a condition of your mortgage. Homeowner's insurance is critical in determining your monthly mortgage payments, as it protects both the property and the homeowner's liability.
  • Private Mortgage Insurance (PMI): If you make a down payment that is less than 20% of the purchase price of your home, your lender may require that you pay for private mortgage insurance. PMI protects the lender in case you default on your loan.
  • Escrow account:Mortgage lenders use escrow to manage and pay expenses such as homeowner's insurance and property taxes on behalf of the borrower. This ensures an organized approach to covering necessary costs associated with homeownership, making it a critical component of monthly mortgage payments.
  • Homeowner's association fees: If you live in a neighborhood or community with a homeowner's association (HOA), you may be required to pay monthly or annual HOA fees . These fees cover the cost of maintaining common areas and amenities like pools or parks.

How Our Mortgage Calculator Helps

Calculator, calculation, insurance

Our online mortgage calculator can be extremely helpful if you want to purchase a home or refinance an existing mortgage. With this tool, you can input the home price, down payment, loan term, interest rate, and property taxes to quickly and easily determine your monthly mortgage payments.

In addition to our primary calculator, we offer various mortgage calculators for affordability, debt-to-income ratios, and specific loan types. These tools are essential for potential buyers and those considering refinancing, as they help evaluate different financial scenarios and make informed decisions.

This can be especially useful if you compare different mortgage options and want to see how different factors affect your overall costs. With our BiggerPockets mortgage calculator, you can make informed decisions about your home financing and ensure you get the best deal possible.

How to Reduce Your Monthly Mortgage Payments

Money, coins, currency, investment

Reducing your monthly mortgage payment can lighten the financial load of homeownership, making it more manageable in the long run. Here are some tips on how you can reduce your monthly mortgage payment:

  1. Refinance: Refinancing involves taking out a new loan to pay off your existing mortgage, often with a lower interest rate or longer loan term. By refinancing, you can take advantage of a lower interest rate and reduce the interest you pay over the life of the loan. However, weighing the costs of refinancing against the potential savings is essential to ensure it makes financial sense for you.
  2. Make a larger down payment: A larger Refinancing involves taking out a new loan to pay off your existing mortgage, often with a lower interest rate or longer loan term. By refinancing, you can take advantage of a lower interest rate and reduce the interest you pay over the life of the loan. However, weighing the costs of refinancing against the potential savings is essential to ensure it makes financial sense for you.
  3. Buy down points: When you buy down points, you pay an upfront fee to your lender to reduce your interest rate over the life of the loan. This can help you save money on interest and lower your monthly mortgage payment. However, weighing the costs of buying down points against the potential savings is vital to ensure it makes financial sense. If you plan to sell or refinance the property in the near future, the initial cost of buying down points may not be worth the potential savings.
  4. By using these strategies, you can reduce your monthly mortgage payment and make the process of paying off your mortgage more affordable and manageable.

Frequently Asked Mortgage Questions

What Is a Refinance?

A refinance changes the terms of your loan. In most cases, it starts the loan clock over, too. A refinance can pull equity (money) out of the home (called a cash-out refinance) and is typically used when rates have dropped.

How Do I Get a Mortgage Loan?

Banks, credit unions, and other financial institutions create mortgage loans. You can also work through a mortgage broker, who acts as a middleman and works to get you the best rates and terms by working with multiple banks.

What Is a Fixed-Rate Mortgage?

A fixed-rate mortgage means your interest rate will never change for the duration of the loan. These mortgages have a consistent total monthly payment for principal and interest, with the composition changing over time due to amortization. Initially, the payments have a higher interest component that decreases as more principal is paid off. When rates are low, obtaining a fixed-rate loan usually makes more financial sense.

What Is an Adjustable Rate Mortgage?

An adjustable-rate mortgage (ARM) means your rate fluctuates with the market. Once per year, your rate can go up or down, depending on the current market rate. Most ARM loans have an adjustment cap (typically 2%), so you don't see wild swings in your rate. Most ARM loans have a set period of time in which the interest rate is fixed. A 7-year ARM would mean the first 7 years are fixed, and the remaining time on the loan is subject to market fluctuations.

What Is a PITI Calculator?

Let's start with what PITI stands for, Principal, Interest, Taxes, and Insurance. These are the four main expenses that come with a mortgage. So the objective of it and other similar tools like a monthly mortgage payment estimator is t give you a quick way to get a fair picture of what you'll actually pay every month, not just the loan payment itself. So if you’re buying a house, this will help you considering property taxes and homeowners insurance so you know if it's within your budget.

What Are Points on a Mortgage Loan?

A point is 1% of the mortgage loan amount and is typically used to “buy down the rate” of your loan. Points are paid upfront in exchange for a lower interest rate for your loan.

When Is the First Monthly Payment Due?

Your first mortgage payment due date depends on the day you close on the home. If you close on or before the 9th of the month, your first payment is due the first of the following month. If you close on or after the 10th of the month, your first payment is due the first day of the second month following closing. (Example: Closing on or before May 9, the first payment is due June 1. Closing on or after May 10, the first payment is due July 1.)

Which Mortgage Option Is Best for Me?

Everyone's circumstances are different. Talk to your lender or mortgage broker about different scenarios to determine which best suits your needs. An investor-friendly lender can help real estate investors determine which type of loan suits their preferred strategy and goals.

What Does My Mortgage Payment Include?

Most mortgages are PITI loans—that stands for Principal, Interest, Taxes, Insurance. Principal is the monthly portion of the original amount borrowed. Interest is the monthly interest on the loan. Taxes are your property taxes. One-twelfth of the annual amount is collected monthly to pay the taxes when they are due, typically the following year. Insurance is your property insurance. Additionally, many mortgage lenders use an escrow account to manage these payments—a critical component of monthly mortgage payments. When the bills for property taxes and homeowners insurance are due, the lender pays them on behalf of the borrower, ensuring an organized approach to covering necessary costs associated with homeownership.

What Happens After I Am Pre-Approved?

A pre-approval means that a lender and a mortgage limit have reviewed your financial information has been projected based on that information. After pre-approval, your lender will provide a letter stating the loan amount you are pre-approved for. Many sellers require this letter when accepting your offer.

What Credit Score Do I Need for a Mortgage Loan?

The higher your credit score, the better terms and rates you'll be offered for your mortgage. FHA will typically go as low as 580 to still qualify for the lowest down payment option. 500-579, and you'll need a larger down payment. You're also much less likely to be approved for a loan. Conventional loans and VA loans require a 620 credit score. USDA loans require a 640 credit score.

What Documents Do I Need for a Mortgage Loan?

Your lender will ask for your last one to two months of paycheck stubs, the past two years of tax returns, and two months of bank statements. There may be additional documentation based on what these documents contain. Your lender wants proof of your income and ability to make the down payment.

What Is the Difference Between Pre-Qualified & Pre-Approved?

Pre-qualified means the lender has looked at your financial information and determined that if that information is correct, you could potentially be approved for a loan. Pre-approved means the lender has run your credit, and if there are no changes, you will most likely be approved for a loan.

Explanation of terms

Interest rate

The interest rate is the percentage of the loan amount that the lender charges the borrower for borrowing the money. It is expressed as an annual percentage rate (APR) and represents the cost of borrowing the funds. The interest rate can be either fixed, meaning it remains constant over the life of the loan, or adjustable, meaning it can change based on market conditions or specific terms outlined in the mortgage agreement.

Loan period

The length of time the borrower has to repay the mortgage in full. This period is typically expressed in years, with standard loan terms being 15, 20, or 30 years. The loan term affects the size of the monthly payments and the total amount of interest paid over the life of the loan. Generally, a longer loan term results in lower monthly payments but a higher total interest cost, while a shorter loan term leads to higher monthly payments and a lower total interest cost.

Down payment

An upfront payment made by the borrower when purchasing a home. It represents a percentage of the home's total purchase price and serves as the borrower's initial equity stake in the property. The down payment reduces the loan amount the borrower needs to finance through the mortgage. Generally, a larger down payment results in lower monthly mortgage payments and can help the borrower qualify for more favorable loan terms, such as a lower interest rate. Standard down payment amounts range from 3.5% to 20% of the home's purchase price, depending on the type of mortgage and the borrower's financial situation.

PMI (Private Mortgage Insurance)

Private Mortgage Insurance (PMI) is a cost incurred by borrowers with a loan amount exceeding 80% of the home price. It is necessary for high-risk loans, particularly when the borrower has a down payment of less than 20%. PMI is calculated based on the loan amount and the borrower's credit score, and it can significantly impact monthly mortgage payments. The insurance protects the lender in case the borrower defaults on the loan.

Use of this calculator signifies your agreement to our Terms of Use and the terms posted below.

The calculators found on BiggerPockets are designed to be used for informational and educational purposes only, and when used alone, do not constitute investment advice. BiggerPockets recommends that you seek the advice of a real estate professional before making any type of investment. The results presented may not reflect the actual return of your own investments. BiggerPockets is not responsible for the consequences of any decisions or actions taken in reliance upon or as a result of the information provided by these tools. Furthermore, BiggerPockets is not responsible for any human or mechanical errors or omissions. BiggerPockets obtains property details from various third-party sources, and BiggerPockets is not responsible or liable for the accuracy, completeness, or suitability of the property details. You are responsible for confirming the property details are accurate, complete, and suitable for your use case.