Use our Mortgage Calculator to estimate your monthly mortgage payment. You can input a different home price, down payment, loan term and interest rate to see how your monthly payment changes.
Our monthly payment estimates are broken down by principal, interest, property taxes and homeowners insurance. We take our calculator a step further by factoring in your credit score range, ZIP code and HOA fees to give you a more precise payment estimate. You’ll also go into the homebuying process with a more accurate picture of how to calculate mortgage payments and purchase with confidence. After you run some estimates, read on for more education and homebuying tips.
How a mortgage calculator can help
Buying a home is often life’s largest financial transaction, and how you finance it shouldn’t be a snap decision. Setting a budget upfront — long before you look at homes — can help you avoid falling in love with a home you can’t afford. That’s where a simple mortgage calculator can help.
A mortgage payment includes four components called PITI: principal, interest, taxes and insurance. Many homebuyers know about these costs but are not prepared for are the hidden costs of homeownership. These include homeowners association (HOA) fees, private mortgage insurance, routine maintenance, larger utility bills and major repairs.
The Bankrate Mortgage Loan Calculator can help you factor in PITI and HOA fees. You also can adjust your loan and down payment amounts, interest rate and loan term to see how much your payments might change. It’s important to know that your specific interest rate will depend on your overall credit profile and debt-to-income, or DTI, ratio (the sum of all of your debts and new mortgage payment divided by your gross monthly income). The riskier the borrower, the higher the interest rate in many cases.
Deciding how much house you can afford
If you’re not sure how much of your income should go toward housing, follow the tried-and-true 28/36 percent rule. Most financial advisers agree that people should spend no more than 28 percent of their gross income on housing (i.e. mortgage payment), and no more than 36 percent of their gross income on total debt, including mortgage payments, credit cards, student loans, medical bills and the like.
Here’s an example of what this looks like:
Joe’s total monthly mortgage payments — including principal, interest, taxes and insurance — shouldn’t exceed $1,400 per month. That’s a maximum loan amount of roughly $253,379.
You can qualify for a mortgage with a DTI ratio of up to 50 percent for some loans, but you might not have enough wiggle room in your budget for other living expenses, retirement, emergency savings and discretionary spending. Lenders don’t take those budget items into account when they preapprove you for a loan; it’s up to you to factor those expenses into your housing affordability picture.
Depending on where you live, your annual income could be more than enough to cover a mortgage — or it could fall short. Knowing what you can afford can help you take financially sound next steps. The last thing you want to do is jump into a 30-year home loan that’s too expensive for your budget, even if a lender is willing to loan you the money.
A mortgage calculator is a springboard to helping you estimate your monthly mortgage payment and understand what it includes. Your next step after playing with the numbers: get preapproved by a mortgage lender.
Applying for a mortgage will give you a more definitive idea of how much house you can afford after a lender has vetted your employment, income, credit and finances. You’ll also have a clearer idea of how much money you’ll need to bring to the closing table.