What is a mortgage calculator?
A mortgage or home loan calculator is a digital tool that estimates your monthly payment and the terms of your mortgage. The calculator offers personalized recommendations that may include:
- Projected monthly mortgage payments, including a breakdown of principal and interest, property tax, homeowners insurance, potential homeowners association (HOA) fees and private mortgage insurance (PMI)
- Length of the mortgage (in years)
- Fixed or adjustable interest rate
- Interest rate and annual percentage rate (APR)
- Closing costs
How can a mortgage calculator help me?
A mortgage calculator helps by estimating the terms of your mortgage, including projected monthly payments. This knowledge helps you understand how much home you can afford, which may, in turn, inform your house-hunting strategy, how you save up for a down payment and more.
How do I calculate a mortgage payment?
You can calculate your mortgage payment by taking a few moments to fill out the information requested in the calculator tool above. Once you've filled out all required fields, choose the “Get loan options” button, which will return top loan recommendations. Reviewing each option may help you understand how your monthly payment would change depending on your loan terms. If you’re interested in taking the next step, choose the “Start online” button to start a preapproval for a mortgage.
What’s included in a mortgage payment?
Principal, interest, property taxes and insurance are the building blocks of a mortgage payment.
- Principal is the original amount you borrowed from your lender.
- Interest is the cost of borrowing money expressed as a percentage rate on the borrowed principal. Your interest rate will vary depending on your lender, the current market and your overall creditworthiness.
- Property tax is a tax paid on the property you own, based on the value of that property. This valuation for tax purposes is typically provided by a government-appointed assessor.
- Insurance is your homeowners insurance policy, which is required by most lenders and may vary based on your loan type and where you live.
How to lower your monthly mortgage payment
If you’re wondering how to lower your monthly mortgage payment, here are a few things worth considering:
- 1. Increase your down payment: If it’s possible to do so, increasing your down payment may help lower your monthly payments by reducing the amount you need to borrow.
- 2. Try to avoid private mortgage insurance (PMI): Depending on the size of your down payment, you may be able to avoid incurring the cost of private mortgage insurance (PMI), which is additional insurance lenders may require for down payments under 20%.
If you already have a mortgage and are seeking ways to lower your existing monthly mortgage payment, here are some potential strategies to consider:
- 3. Refinance your mortgage: Refinancing your mortgage may help you get a better interest rate and lower your monthly mortgage payments.
- 4. Switch to an adjustable-rate mortgage (ARM): An adjustable-rate mortgage may start with a lower introductory rate that temporarily lowers your monthly mortgage payments. Once the introductory period is over, your mortgage rate will adjust every term. Depending on the current market, your interest could go up or down. may start with a lower introductory rate that temporarily lowers your monthly mortgage payments. Once the introductory period is over, your mortgage rate will adjust every term. Depending on the current market, your interest could go up or down
- 5. Make extra lump sum payments: By making extra mortgage payments, you may decrease the amount you owe and, ultimately, the amount of interest you pay. If you do make additional mortgage payments, consider specifying if the extra payment goes toward your principal.
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