Buying a home is an exciting milestone for many people, but it can also be a complicated process that requires careful financial planning. One of the most important steps in understanding your potential mortgage payment.
This simple mortgage calculator helps you calculate your loan payments if you know the value of the home you’re buying, your down payment, the interest rate, and the remaining number of years on your loan.
This calculator is specifically for mortgages. If you are looking for something more general, then try out our loan payment calculator instead.
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There are 4 inputs to this calculator:
- Total Home Value: This is the value of the home (including any mortgage insurance amounts) on which the mortgage is being taken out. It is important to input the correct home value to get accurate results from the calculator.
- Down Payment (%): In percentage terms, this is value of that is being put as a down payment. Typically this varies from 5% to 20%.
- Interest Rate: The interest rate is the cost of borrowing money, expressed as a percentage. It is essential to enter the correct interest rate, as it directly affects the amount you will pay over time.
- Term of Loan (Years): The term of the loan is the length of time you have to repay the loan. Technically it is called the amortization period. Please enter the number in years.
The calculator shows the result in a table format. It shows what your payment will be if you choose to pay it off on either a bi-weekly (once every two weeks – 26 times a year), twice monthly (24 times a year), monthly (12 times a year), or annually (once a year).
It also shows the total value of the interest payments that you will make over the entire life of the home loan. The higher the interest rate and the longer the term, the more you will pay in interest.
A chart is also generated which shows the expected mortgage balance over time (the black line – values of the left). The chart also shows how your periodic loan payments are being allocated. In the start, the principal payments (in blue, values on the right) are outweighed by the interest payments (in yellow, values on the right). As your mortgage balance (i.e. the principal) starts to decline over time, a greater proportion of your payments go towards the principal.
The drop down menu helps you get a bit more fine-grained control over the output of the chart. It shows the evolution of the loan and the payments over time based on the option selected.
There is also a convenient Share button for you to save or share your results. Save the generated link for your future reference as clicking on it will reload the values you used.
The Benefits of a Mortgage Payment Calculator
It’s important to plan your cash flows and ensure that you’re able to meet all your mortgage payment obligations and of course your other regular life expenses. Let’s look at some of the benefits of using a mortgage payment calculator to plan out your financials:
- Affordability assessment: A mortgage payment calculator helps you determine the price range of homes you can afford based on your income, debt, and other financial factors. This information is crucial to ensure you’re not overextending yourself financially and can comfortably make monthly mortgage payments.
- Monthly payment estimation: By inputting the loan amount, interest rate, and loan term, a mortgage payment calculator will estimate your monthly mortgage payment. This allows you to budget accordingly and make any necessary adjustments to your home search.
- Interest rate comparison: A mortgage payment calculator enables you to compare different interest rates, helping you understand how changes in just a 25 basis points can impact your monthly payment and the total amount you pay over the life of the loan.
- Amortization schedule: Some mortgage payment calculators provide an amortization schedule, which outlines how much of each monthly payment goes towards principal and interest. This helps you see how your mortgage balance decreases over time and how much interest you’ll pay throughout the loan term.
Owning a home also brings in other fixed expenses and costs such as property taxes, homeowners’ insurance, mortgage insurance, and maintenance. You will have to add on these expenses to your mortgage payments to calculator your total cash outflow.
As stated here, it’s important to calculate the total outflow accurately so that you’re not overextending yourself!
If you are trying to figure out what is the maximum value of a house you can afford in the US, you actually need the reverse of this mortgage calculator. Check out our House Affordability Calculator to help you answer just that question.
by Andrew Garcia
Andrew, an alumnus of South Florida State College, loves finance, fintech, and coding. When he’s not crunching numbers at the bank, he’s passionately writing about personal finance and building calculators for PFF. See more.