Intuitively, we all know taking out a mortgage will be, for almost everyone, the biggest financial decision a person or family will make in their lifetime.
Further, a home loan is frequently thought of as a good investment when it is used to finance the purchase of a house or building that has a reasonable chance to appreciate in value.
"But how do I know if I can afford a mortgage," is a common refrain.
Helping you answer this question is precisely the goal of this mortgage calculator. You'll quickly notice this calculator is capable of a great deal more than just calculating a monthly mortgage payment. Spend a few minutes with it, and it will help you understand the actual cost of any potential (or existing) home loan. More below
The Mortgage Payment
This home loan calculator does have a lot of options. Don't let the number of details put you off. Fortunately, if you only want to calculate a payment amount, you'll frequently have to enter only three values while leaving the other settings and inputs unchanged. The payment calculation is as easy as this:
- Click clear and enter values for:
- Loan Amount
- Number of Payments
- Annual Interest Rate
- Leave "Payment Amount (P & I only)" set to 0.
- Click either "Calc" or "Payment Schedule."
That's it. Now you'll know the principal and interest payment required to pay off the debt.
But for sure, this debt payment does not begin to cover the full cost of having a home loan. There are few other expenses, of course! And this calculator is designed to consider them all.
VERY IMPORTANT - You must enter a 0 if you want a value calculated. Some users have been frustrated by this. They want to know why the calculator does not just recalculate if they have changed one of the inputs.
This behavior is by design. We want the calculator to create an amortization schedule using whatever parameters you want to use. This is a feature!
By not automatically recalculating a payment, this calculator lets those users who do not have a "standard" loan create a payment schedule.
ABOUT DATES - This calculator now allows irregular length first periods. That is, the calculator calculates the exact amount of interest due even when the initial period is shorter or longer than the other scheduled periods. This will result in payment amounts as well as interest charges that do not match other calculators. If you want to match other calculators then set the "Loan Date" and "1st Payment Date" so that the time between them equals one full period as set in "Payment Frequency". Example: If the "Loan Date" is May 15th and the "Payment Frequency" is "Monthly," then the "1st Payment Date" should be set to June 15th, that is IF you want a conventional interest calculation. See the end of the "Help" text for some more details.
Of course, you can always leave the dates set as they are when the calculator loads.
Calculate many unknowns including the projected future value of the home. Free #mortgage calculator 😎 https://t.co/c982mU39C6 #RealEstate Compare future value to interest paid. pic.twitter.com/Qb03462EL5— Karl Thompson (@Calculators4You) January 10, 2018
A Mortgage is More Than a Payment Amount
You can use this calculator to answer such questions as:
- How much mortgage can I afford?
- What is the mortgage payment?
- How much money do I need to buy a house?
- What is the down payment on a house?
The printable mortgage schedule has recently been upgraded to add support for the following:
- PMI — private mortgage insurance. Could be required if your loan to value (LTV) is more than 80%. That is, your down payment frequently needs to be 20% or more to avoid PMI.
- Property Taxes — are included in the escrow column on the schedule. Please be sure to enter an annual amount in the calculator.
- Casuality Insurance — is also included in the escrow column on the mortgage schedule. Again, enter an annual amount.
- Tax Benefits — shows tax savings as result of potential deduction for mortgage interest and property taxes.
- Points — calculated on the loan amount, they are reported in the first row of the schedule.
All the above are optional. That is, you may set them to 0.
Mortgage Calculator Help
Unlike our general loan or simple loan calculators, this calculator will allow you to have more than one unknown value in certain cases.
To indicate an unknown value, enter '0' (zero). There must be one unknown in each group — that is two unknowns are required.
You can enter the price of the real estate, the down payment percent you need, the total number of periods for which you want to borrow the money and the interest rate. When you click on "Calc", the loan amount and the monthly payment will be calculated.
If you enter the loan amount and "0" for the down payment percentage, then the down payment percentage (and down payment amount) will be calculated.
If you enter "0" for the price, a down payment percentage, "0" for the mortgage amount, the total periods, the interest rate and the payment you can afford, the calculator will calculate the loan amount and the price you can afford to pay. You can use this calculation to tell you what you can afford to pay and borrow and still stay within a budget.
Annual Property Taxes, Annual Insurance and Private Mortgage Ins. (PMI) are all optional. If you enter values, the periodic portion of each will be calculated and shown on the schedule. Property taxes and insurance are both included under escrow.
If a borrower does not have cash to cover at least 20% of the purchase price, some lenders will require the borrower to purchase private mortgage insurance to cover against a possible default. Premiums are typically 0.5% to 2.0% of the original loan amount. The borrower can drop the insurance coverage once the mortgage balance is less than 80% of the original purchase price. The calculator handles this automatically. (There may be other conditions as well under which the lender will no longer require the PMI. One such case might be apprciation of the real estate.)
Points are charges that are normally due at closing. It is an optional input. Borrowers (normally only in USA) may select to pay a lender "points" up front in exchange for a lower interest rate. Points are expressed in percent and are calculated on the amount borrowed. 3 points on a $200,000 mortgage equals $6,000. If the user enters points, this calculator includes their value in the summary and as part of the total payment at loan origination on the payment schedule.