We take the calculator a step further to include your zip code, credit score, and HOA fees (if applicable) to give you an even clearer estimate.
You can also try our amortization schedule calculator to see how the estimate total will break down in terms of principal and interest per month.
Mortgage Payment Breakdown
Monthly mortgage payments consist of various components, in addition to the principal and interest. Here are some key pieces within the payment:
The amount borrowed from the lender, separate from interest. With each mortgage payment, the principal will decrease.
The cost of borrowing money. A lender will charge you an annual percentage for providing you with the upfront capital to buy your home. This percentage will vary per person, but it’s mainly determined by current rate trends and the borrower’s creditworthiness.
An insurance policy that will cover the homeowner for damage or a loss due to fire, theft, harsh weather conditions, etc. Most insurance providers will apply an annual premium, which is then broken down into monthly payments.
The tax paid on your home and any corresponding land. Property taxes are assessed annually based on the value of the property. Many homeowners choose to roll them into the monthly mortgage payments. In this case, 1/12th of the annual tax bill is due each month.
If your down payment is less than 20% of the purchase price, a lender will typically require a mortgage insurance policy. This will protect the lender if the borrower defaults on the loan. Once the borrower’s equity increases to 20%, the insurance policy can be cancelled.
If you belong to a homeowner’s association of a co-op or condo, member residents usually pay dues directly to the source. While this fee is not typically rolled into the mortgage, it is still a monthly bill that should be accounted for.
How to Use Our Mortgage Payment Calculator
- Home Price: enter the home’s purchase price or current market value if refinancing.
- Down Payment: enter the amount of cash you’re paying upfront.
- Period: choose your loan type and term (5/1 ARM Variable, 15-year fixed, or 30-year-fixed).
- Rate: enter the annual interest rate attached to your loan.
- Zip Code: enter the zip code of the house you’re buying or refinancing.
- Credit Score: choose a range that best represents your current credit score.
- Property Tax: enter the amount you owe for monthly property tax, i.e., the annual amount divided by 12.
- Homeowner’s Insurance: enter your monthly insurance premium.
- HOA fees (optional): enter your monthly HOA fees.
After all these figures have been entered, the calculator will estimate your total payment. This number will be shown at the top of the page.
The Underlying Formula… For the Math Geeks
A mortgage payment calculation is based on this formula:
M = P [ r (1+r) ^n / ((1+r) ^n) -1)]
- M = total payment
- P = principal loan amount
- r = monthly interest rate
- n = the number of payments over the life of the loan
The Benefits of Using a Mortgage Calculator
Buying a home is likely the biggest the purchase you’ll ever make – kind of a big deal. It’s important to make sure you’re making the right decision at every step of the way. This includes setting an attainable budget and a plan for financing the purchase.
A mortgage calculator can help with that. It will break down payments by month, helping you determine exactly what priced home you can afford.
It’s best to only look at homes within your budget. Otherwise, you could fall in love with one that’s not within reach. A mortgage calculator will help you set that budget, and therefore your expectations when searching for homes online and going to open houses.
The calculator takes all aspects into account – the principal loan, interest, property tax, insurance, etc. You can home shop confidently, knowing you’re within budget.
Home Affordability Calculator