See How a Mortgage Fits in Your Budget
Calculating a mortgage payment is an important part of the home-buying process.
A mortgage payment is made up of several components, including principal, interest, taxes, and insurance.
To calculate your monthly mortgage payment, follow these seven steps below.
How to Calculate a Mortgage Payment
1. Determine Your Mortgage Amount
The first step in calculating your mortgage payment is to determine your loan amount. This is the total amount of money you will be borrowing from your lender.
To determine your loan amount, subtract your down payment from the purchase price of the home. For example, if the purchase price of the home is $300,000 and you make a 20% down payment of $60,000, your loan amount would be $240,000.
2. Calculate Your Interest Rate
Your interest rate is the percentage of your loan amount that you will be charged in interest each year.
Your interest rate will depend on a variety of factors, including your credit score, the type of loan, whether your rate in foxed or adjustable, and current market conditions.
3. Select a Mortgage Loan Term
Your loan term is the length of time you will have to repay your mortgage. The most common mortgage loan terms are 15 years and 30 years.
Shorter loan terms typically come with lower interest rates but higher monthly payments, while longer loan terms come with higher interest rates but lower monthly payments.
4. Research the Property Tax Rate
In addition to your principal and interest payments, you will also need to pay property taxes. Your property tax rate will depend on the location of the home and the value of the property.
To determine your property tax rate, you can usually find information on your local government website or through your local tax assessor's office.
5. Determine Homeowners Insurance Cost
Homeowners insurance is also required to protect your home against damage from events such as fire or theft. Your insurance cost will depend on the location of the home, the value of the property, frequent weather conditions, or special structures on the property.
To determine your homeowner’s insurance cost, you can get quotes from insurance providers or work directly with a broker.
6. Research Any HOA Fees
Depending on the type of property you are looking to purchase, you may have monthly or yearly HOA dues. HOA fees stem from a home being inside an HOA community.
To determine if the property you’re interested in has any HOA fees, contact your local property appraiser or speak with the property listing agent.
7. Calculate Your Monthly Mortgage Payment
Once you have all the necessary information, you can use the mortgage calculator to estimate your monthly mortgage payment.
Keep in mind that this is an estimate, and your actual mortgage payment may vary based on other factors, like private mortgage insurance or HOA fees.
For more information on mortgage estimates, please visit our Mortgage page. One of our expert loan officers will answer any questions you have.