Mortgage Payment Calculator

Mortgage Loan Payment Basics

This mortgage payment calculator is designed to aid you in determining whether your can afford the purchase of your next home. The calculator factors that will determine your monthly payment for home residence includes the home mortage loan amount to be financed, the term length and the interest rate. The mortgage loan amount to be financed will be the purchase price of the house, less your initial deposit. In addition, you will need to add to your monthly budget calculations related expenses such as property taxes, insurance and maintenance.

Owning a home is generally the largest investment for most Americans. According to the Federal Financing Housing Agency, in 2018, the average mortgage loan in the US was $312,900, with 30-year term, fixed interest rate of 4.64%. In 2015, the US Census Bureau indicated that the median monthly mortgage payment was $1,030. The total monthly housing costs rise to $1,492 when including property taxes and insurance. These later figures vary by geographic location and value of a house.

Home mortgage interest rates vary based primarily on the loan amount and the loan-to-value ratio (LTV). The higher the loan amount, the greater the risk to the lender resulting in a higher interest rate. If the mortgage loan amount is greater than 80% of the value of the property (an LTV of greater than 80%), there will be a corresponding higher interest rate as well. Lenders will also take into consideration the borrower’s credit score and debt-to-income ratio (DTI) in determining the mortgage rate offered. A lower DTI indicates that the borrower has better financial health and presents less risk to the lender.

Calculate Your Monthly Mortgage Payment

To use this mortgage payment calculator, enter the mortgage price, the mortgage loan interest rate and term of the loan, the annual property taxes and insurance. The calculated monthly mortgage payment is only your financial costs. You will need to add your maintenance fees to determine your total cost of home ownership.

As an example, a borrower purchasing a house valued at $100,000, with a standard mortgage loan at 4.15%, for 30 years, with annual property taxes and insurance of $1,000 will have a monthly mortgage finance payment of $652/Month.

You will find that the most important factors affecting your mortgage financial payment is the total amount of the mortgage loan, the term length of the loan, then interest.

Lender Debt-To-Income Ratio View

Debt To Income Ratio

The result of the debt to income ratio calculator is used by lenders because research shows that borrowers with high DTIs are more likely to have problems making their payments. It is pretty basic. The higher your debt payments, the more difficult it is to manage additional debt such as a mortgage or personal loan.

  • The ability-to-repay rule is the reasonable and good faith determination most mortgage lenders are required to make that you are able to pay back the loan. Under the rule, lenders must generally find out, consider, and document a borrower’s income, assets, employment, credit history and monthly expenses.
  • A debt-to-income ratio of 43% is generally the highest mortgage lenders will accept for a qualified mortgage, which is a loan that includes affordability checks. FHA mortgage loans allow DTI ratios above 43% in some instances.
  • Personal loan companies often approve consumers with debt-to-income ratios of 50% or more, and some exclude mortgage debt from the DTI calculation. This flexibility exists since personal loans are often used to consolidate credit card debt.
  • For those borrowers with existing student loans, particularly Federal, Fannie Mae mortgage loan guidelines allow DTI ratios up to 50%.
  • While a lender includes your credit score as part of the loan evaluation process, your debt-to-income ratio does not affect your credit scores. The national credit-bureaus include your income in your credit reports but is not used by FICO and Vantagescore in their credit score calculations.

Now the hard part. Does the total monthly mortgage costs fit your budget? Remember, you will be paying this amount monthly, for between 15 – 30 years, regardless of what else happens in your life.


Reducing Your Mortgage Payment

Adjusting Your Mortgage Payment

Managing to a budget often requires compromises. If you find that your budget does not allow for your house purchase plans, it is probably time to rethink your assumptions and possibly your expectations. Some options for your to consider:

  • Start with the most basic. Reduce the house purchase price. Everything starts here. In the mortgage payment calculator, lower the value of the house mortgage loan, keeping all the other fields the same, until the monthly payment fits your budget needs.
  • That purchase price is what you can afford, without making adjustments in mortgage financing. Adjustments in financing, whether the term of the mortgage loan, type (fixed vs variable) or interest rate, will invariably increase your total interest costs. Negotiate a better price with the house seller or consider a different, less expensive house.
  • Consider an FHA mortgage as an alternative lender and when convenient consider refinancing at a later date.
  • Increase the mortgage loan term length, at the expense of paying more interest charges. The option normally exists to refinance in the future if your financial situation improves.
  • The final option is to try and reduce your APR on the mortgage loan. This may entail the need to improve your credit score and worth a few months delay in the house purchase until it improves.

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