Mortgage Calculator

How to calculate your payments using a mortgage calculator

Here’s how to use our mortgage calculator to easily estimate payments:

1. Enter your home price. In the Home price field, input the price of the home you’re buying (or the current value of your home if you’re refinancing).
2. Enter your down payment. In the Down payment field, input the amount of your down payment (if you're buying) or the amount of equity you have (if you're refinancing). You can input either a dollar amount or percentage.
3. Enter your loan term. In the Loan term field, enter the length of your loan — usually 30 years, but could be 20, 15 or 10.
4. Enter your interest rate. In the Interest rate field, input the rate you expect to pay or are currently paying. Our calculator defaults to the current average rate, but you can adjust this percentage.
5. Enter your ZIP code. In the ZIP code field, input your zip code.
6. Click Update.

Bankrate's calculator also estimates property taxes, homeowners insurance and homeowners association fees. You can edit these amounts, or even edit them to zero, as you're shopping for a loan.

In addition, the calculator allows you to input extra payments (under the “Amortization” tab). This can help you decide whether to prepay your mortgage and by how much.

Typical costs included in a mortgage payment

Your mortgage payment is largely comprised of principal and interest. Here's what that means, along with other definitions related to your loan:

• Principal: This is the amount you borrowed from the lender, effectively your home's price minus the down payment.
• Interest: This is what the lender charges you to borrow the principal, or loan amount. Interest rates are expressed as an annual percentage.
• Down payment: This is the portion of the home’s price you’re not financing with a mortgage. For many borrowers, this is as little as 3 percent.
• Closing costs: Closing costs are one-time fees associated with getting a mortgage. They include the lender's origination fee (if it charges one), recording fees and fees for settlement and title services. Altogether, these typically run 2 percent to 5 percent of the mortgage and are usually paid by or on the day the loan closes.
• Property taxes: This is the tax on your home levied by your city or town, paid for as long as you own it. If your mortgage lender requires an escrow account, you'll pay a portion of your annual property tax bill with each monthly mortgage payment.
• Homeowners insurance: Your insurance policy helps protect you financially from damage related to covered events. If you live in a flood or other disaster-prone zone, you'll be required to have additional coverage. As with property taxes, you'll pay a portion of your annual insurance premium each month with your mortgage payment.
• Homeowners insurance: If you’re getting a conventional or FHA loan and your down payment is less than 20 percent of the home's purchase price, you'll pay mortgage insurance premiums, which are also added to your monthly payment.

Mortgage payment formula

For the mathematically inclined, here's a formula to help you calculate mortgage payments manually:

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This formula can help you crunch the numbers to see how much house you can afford. Alternatively, you can use this mortgage calculator to help determine your budget.

How a mortgage calculator can help you

Our mortgage calculator can help guide many of the decisions related to buying a home or refinancing your mortgage, such as:

• Whether you're spending more than you can afford: Use the calculator to see how much you’ll pay each month, including in homeowners insurance premiums and property taxes. This can help you determine if you’re stretching your home buying budget too far, or paying too much in terms of debt-to-income (DTI ratio).
• Whether your budget allows for a shorter-term loan: Use the calculator to compare the monthly payments and total interest between a 10-, 15-, 20-  or 30-year loan. Shorter-term loans come with lower interest rates, but higher monthly payments.
• Whether you should put more or less money down: Use the calculator to weigh different down payment scenarios and how that’ll affect how much you’ll borrow and pay.
• Whether you should pay off your mortgage early: Use the calculator to learn how extra payments can impact how quickly you’ll repay the loan and  any interest savings.
• When you can get rid of mortgage insurance: Use the calculator’s amortization schedule to determine when you’ll hit 20 percent equity — the magic number you need on a conventional loan to request that your lender remove private mortgage insurance (PMI).

Kudos Tip
Making extra payments—even small ones—toward your principal each month can shave years off your mortgage and save you thousands in interest.

Deciding how much house you can afford

If you're not sure how much of your income should go toward housing, it might help to start with the 28/36 rule, which dictates you spend no more than 28 percent of your gross income on housing costs and no more than 36 percent of your gross income on overall debt, including housing costs.

Say Joe makes $60,000 a year. That's a gross monthly income of $5,000 a month. Twenty-eight percent of that equals $1,400. If Joe were to abide by the 28/36 rule, he’d spend no more than $1,400 on a mortgage payment each month.

You can use our calculator to make similar estimations within the 28/36 rule.

Meeting the 28/36 rule isn’t always doable or desirable, however.

“Many prospective homeowners are tempted to 'stretch' when buying a home since it can literally be the culmination of a dream,” says Mark Hamrick, Bankrate senior economic analyst. “At the same time, given that this is one of the most expensive and consequential purchases of a lifetime, the transaction needs to co-exist with our many other financial goals including saving for retirement, saving for emergencies and paying down debt.

“Being conservative and cautious with a home purchase is advisable,” Hamrick says. “If it turns out that income rises down the road, that presents an opportunity to sock money away to pay for repairs, maintenance and renovations later.”

How to lower your monthly mortgage payment

If the monthly payment you're seeing in our calculator looks a bit out of reach, you can try some tactics to reduce the hit. Play with a few of these variables:

• Choose a longer loan. With a longer term, your payment will be lower (but you'll pay more interest over the life of the loan).
• Spend less on the home. Borrowing less translates to a smaller monthly mortgage payment.
• Shop for a lower interest rate. You don't have to get your mortgage from your bank. Comparing offers from a few lenders can help you uncover the lowest rates.
• Make a bigger down payment. This is another way to reduce the size of the loan.

Next steps to get a mortgage

A mortgage calculator is a springboard to help you estimate your monthly mortgage payment and understand what it includes. Once you have a good idea of your budget, you might move on to these next steps:

1. Get a mortgage pre-qualification or pre-approval.
2. Shop for homes and make an offer.
3. Apply for mortgage.

Additional mortgage resources

• How to get a mortgage
• Types of mortgages
  
• How to compare mortgage rate offers
• First-time homebuyers guide

Compare mortgage rates for different loan types

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Frequently asked questions