What is a mortgage calculator, and how can it help me?

A mortgage calculator helps you estimate your monthly home loan payments based on factors like the loan amount, interest rate, and other costs like insurance and property taxes. By adjusting these variables, you can better understand your financial commitment and plan accordingly.

What’s included in my monthly mortgage payment?

Your monthly mortgage payment typically includes the loan’s principal and interest. It may also cover property taxes, homeowner's insurance, and other fees like HOA dues or PMI if required by your loan. Our calculator accounts for these costs, giving you a clear picture of your total monthly payment.

How does my down payment affect my mortgage?

A larger down payment lowers the amount you need to borrow, reducing both your monthly payment and the total interest paid over the life of the loan. If you make a 20% down payment, you may also avoid PMI, which can save you money each month.

What is PMI, and when is it required?

Private Mortgage Insurance (PMI) is typically required when your loan amount is more than 80% of the home’s purchase price. PMI protects the lender, and the monthly premium adds to your mortgage payment. PMI is generally canceled once you’ve built 20% equity in your home.

How does my loan term affect my monthly payment?

The length of your loan term has a significant impact on your payment. Shorter terms, like a 15-year fixed loan, typically have higher monthly payments but save you money on interest. A 30-year term, however, offers lower monthly payments with more interest paid over time.

What’s the difference between property taxes and homeowner’s insurance?

Property taxes are local government fees based on your home’s value, while homeowner’s insurance is an annual premium you pay to protect your property. Both are often included in your monthly mortgage payment if you have an escrow account, but they serve different purposes.

Can I avoid paying HOA fees?

HOA fees are only applicable if you buy a property in a community with an active homeowner's association. If there’s no HOA associated with the property, you won’t need to budget for these fees.

How accurate is the mortgage calculator?

Our calculator provides an estimate based on the details you provide, but actual loan terms may vary based on lender requirements, taxes, and insurance premiums. It’s always wise to confirm details with your lender to get a precise monthly payment.

Can I use this calculator if I’m buying an investment property?

Yes, this calculator can be used to estimate payments on any type of property. However, keep in mind that lenders may have different terms and interest rates for investment properties compared to primary residences.

How does an adjustable-rate mortgage (ARM) affect my payments?

An ARM usually starts with a lower interest rate that’s fixed for a set period (e.g., 5 years). After this period, the rate adjusts based on market conditions. This means your payments could increase or decrease over time. Our calculator can help you see the difference between fixed and adjustable rates.

Mortgage Calculator

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Loan Amount
Monthly Mortgage Payment
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Understanding How to Calculate Mortgage Payments

NewLocay’s mortgage calculator gives you control over your mortgage details, while offering smart assumptions for values you may not yet know. These helpful defaults simplify using the calculator and can be adjusted anytime.

Keep in mind, your monthly home payment involves more than just repaying the loan amount. The “principal” is the base amount you borrowed, while the interest is the lender’s charge for borrowing. Together, these form the core of your loan payments.

For most homeowners, the total monthly mortgage payment also includes costs like homeowner’s insurance and property taxes. If you have an escrow account, your payment will cover these costs in addition to your loan’s principal and interest. Your lender typically sets aside this escrow amount and pays the bills when due. Other charges, like private mortgage insurance (PMI) or homeowner’s association (HOA) fees, may also be part of your mortgage payment, depending on your loan type.

Home Price

This is the amount you paid for a property or plan to pay for a future purchase.

Down Payment

Most loans require at least 3% of the home’s price as a down payment. Some loans, such as VA or USDA loans, may not require a down payment. Though a 20% down payment is not always necessary, making a larger down payment reduces your monthly payment and may allow you to avoid PMI. NewLocay’s resources can help you explore down payment assistance programs if needed.

Loan Program

Your choice of loan program impacts both your interest rate and monthly payments. Use NewLocay’s calculator to explore common programs, like 30-year fixed, 15-year fixed, or 5-year ARM loans, to see how each option changes your payments.

Interest Rate

The mortgage interest rate represents the annual cost of borrowing, shown as a percentage. Our calculator pre-fills the current average interest rate, which you can adjust for a more accurate estimate.

Private Mortgage Insurance (PMI)

If your loan exceeds 80% of the purchase price, lenders may require PMI to protect their investment. PMI depends on factors like your credit score and down payment amount and adds a monthly cost to your mortgage.

Property Taxes

Property taxes are typically calculated annually and divided by 12 months for each mortgage payment. You can estimate this amount based on your home’s value or add your known annual tax amount for accuracy.

Homeowner’s Insurance

Homeowner’s insurance protects your property and typically costs less than 1% of the home price annually. The monthly cost is added to your mortgage payments.

HOA Fees

If you own a home in a development or condo community, HOA fees may apply. These monthly dues cover amenities, shared maintenance, and community insurance. Simply enter your monthly HOA fee in the calculator if it applies.

FAQs

What is a mortgage calculator, and how can it help me?
A mortgage calculator helps you estimate your monthly home loan payments based on factors like the loan amount, interest rate, and other costs like insurance and property taxes. By adjusting these variables, you can better understand your financial commitment and plan accordingly.
What’s included in my monthly mortgage payment?
Your monthly mortgage payment typically includes the loan’s principal and interest. It may also cover property taxes, homeowner’s insurance, and other fees like HOA dues or PMI if required by your loan. Our calculator accounts for these costs, giving you a clear picture of your total monthly payment.
How does my down payment affect my mortgage?
A larger down payment lowers the amount you need to borrow, reducing both your monthly payment and the total interest paid over the life of the loan. If you make a 20% down payment, you may also avoid PMI, which can save you money each month.
What is PMI, and when is it required?
Private Mortgage Insurance (PMI) is typically required when your loan amount is more than 80% of the home’s purchase price. PMI protects the lender, and the monthly premium adds to your mortgage payment. PMI is generally canceled once you’ve built 20% equity in your home.
How does my loan term affect my monthly payment?
The length of your loan term has a significant impact on your payment. Shorter terms, like a 15-year fixed loan, typically have higher monthly payments but save you money on interest. A 30-year term, however, offers lower monthly payments with more interest paid over time.
What’s the difference between property taxes and homeowner’s insurance
Property taxes are local government fees based on your home’s value, while homeowner’s insurance is an annual premium you pay to protect your property. Both are often included in your monthly mortgage payment if you have an escrow account, but they serve different purposes.
Can I avoid paying HOA fees?
HOA fees are only applicable if you buy a property in a community with an active homeowner’s association. If there’s no HOA associated with the property, you won’t need to budget for these fees.
How accurate is the mortgage calculator?
Our calculator provides an estimate based on the details you provide, but actual loan terms may vary based on lender requirements, taxes, and insurance premiums. It’s always wise to confirm details with your lender to get a precise monthly payment.
Can I use this calculator if I’m buying an investment property?
Yes, this calculator can be used to estimate payments on any type of property. However, keep in mind that lenders may have different terms and interest rates for investment properties compared to primary residences.
How does an adjustable-rate mortgage (ARM) affect my payments?
An ARM usually starts with a lower interest rate that’s fixed for a set period (e.g., 5 years). After this period, the rate adjusts based on market conditions. This means your payments could increase or decrease over time. Our calculator can help you see the difference between fixed and adjustable rates.