How to Use the Mortgage Calculator
This free mortgage calculator helps you estimate your monthly payment with the principal and interest components, property taxes, PMI, homeowner’s insurance and HOA fees. It also calculates the sum total of all payments including one-time down payment, total PITI amount and total HOA fees during the entire amortization period. You are presented with a detailed mortgage payment schedule. Many homeowners wish to accelerate their mortgage schedule through extra payments or accelerated bi-weekly payments. A table showing the difference in payments, total interest paid and amortization period under both schemes is also displayed.
Here are a few important points to help you understand the mortgage calculations:
- The difference between home value and the mortgage amount is considered your down payment. If you are refinancing your loan, you should treat the down payment amount as the equity you own in your home.
- You should take into account loan limits on conventional loans set by FHFA.
- Private Mortgage Insurance (PMI) is calculated only if down payment is less than 20% of the property value (i.e., loan-to-value ratio is higher than 80%) and stops as soon as the outstanding principal amount (balance) is less than or equal to 80% of the home value. PMI is estimated at following rates: 95.01-100% LTV = 1.03% , 90.01-95% LTV = 0.875%, 85.01-90% LTV = 0.625%, 80.01-85% LTV = 0.375%. The actual PMI is based on your loan-to-value (LTV), credit score and debt-to-income (DTI) ratio. Learn how to avoid PMI.
- PMI, property taxes and homeowners insurance (aka hazard insurance OR home insurance) are defaulted to national averages in the US. These averages may not be accurate for your particular situation. You should override and enter your own estimates, if required.
- Although you may not pay property taxes and insurance on a monthly basis, it is factored into the total monthly payment with the assumption that you are setting aside this amount (through escrow / impound account or some other means) every month.
- You can enter down payment, one-time expenses, property taxes and homeowners insurance as a percentage of the home value and PMI as a percentage of the mortgage amount. You also have the choice of entering exact dollar amounts instead, if desired.
- One-time expenses can include closing costs (including discount points) and any money spent on one-time repair or renovation of the property.
- Bi-weekly payments (aka 'Accelerated Bi-weekly', 'True Bi-weekly' or 'Bi-weekly applied bi-weekly') help reduce your total interest cost and accelerate mortgage payoff.
- All extra payments pay down the principal and help reduce the loan tenure.
- You can print OR share a custom link to your mortgage calculation, with all your numbers already pre-filled, with your friends & family.
- Taxes, PMI, Insurance & Fees includes property taxes, PMI, Homeowner's Insurance and HOA Fees.
- PITI refers to Principal, Interest, Taxes and Insurance.
The mortgage calculations do not include the following costs and savings:
- Certain recurring costs associated with home ownership (e.g., utilities, home warranty, home maintenance costs etc.)
- Savings such as tax deductions on your mortgage payments
If you opt for ARMs, your mortgage interest rates (and monthly payment) will change over time. Some of the recurring expenses will change over the lifetime of home ownership due to home value changes, inflation and other factors. Some expenses (e.g., property taxes, homeowner's insurance etc.) will continue even after you have paid off your loan. You should consider all these factors, especially when making a rent vs. buy decision.
Best wishes for an affordable home mortgage loan and a great new home!
Update: The Federal Housing Finance Agency (FHFA) has announced on 29-Mar-2023 that Fannie Mae and Freddie Mac will allow borrowers facing financial hardship to defer up to six months of mortgage payments. Payment deferral will help borrowers keep the same monthly mortgage payment by moving past-due amounts to the end of the loan as a non-interest bearing balance, due and payable at maturity, sale, refinance, or payoff. Borrowers can contact their servicer to discuss whether this is an appropriate solution for their unique circumstances.
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