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Mortgage & Home Loan Calculator

If you are looking to invest in real estate but not sure how much house you can afford, our mortgage calculator is the best way to determine your monthly payments!
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Total Monthly Payment:
Monthly Principal + Interest (P&I)
Monthly Taxes
Monthly Insurance

%

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Need a mortgage loan?

Maybe you are earlier in the home buying process and just playing around with numbers. It’s hard to know how much you can afford before you are approved for a loan. If you are on the lookout for a mortgage lender but aren’t sure where to start, BiggerPockets can help you out. Should you not know what type of loan you need or where to start with lenders our mortgage loan page will lead you in the right direction.
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Use of this calculator signifies your agreement to our Terms of Use and the terms posted below.

The calculators found on BiggerPockets are designed to be used for informational and educational purposes only, and when used alone, do not constitute investment advice. BiggerPockets recommends that you seek the advice of a real estate professional before making any type of investment. The results presented may not reflect the actual return of your own investments. BiggerPockets is not responsible for the consequences of any decisions or actions taken in reliance upon or as a result of the information provided by these tools. Furthermore, BiggerPockets is not responsible for any human or mechanical errors or omissions. BiggerPockets obtains property details from various third-party sources, and BiggerPockets is not responsible or liable for the accuracy, completeness, or suitability of the property details. You are responsible for confirming the property details are accurate, complete, and suitable for your use case.

Types of Mortgages and Home Loans

  • Conventional Loans

    A conventional loan is a mortgage that is not guaranteed or insured by any government agency, including the Federal Housing Administration (FHA), the Farmers Home Administration (FmHA), and the Department of Veterans Affairs (VA). It is typically fixed in its terms and rate.

  • Adjustable-Rate Mortgage (ARM)

    Adjustable rate mortgages (ARMs) allow borrowers to pay lower interest rates on their loan for a set period, after which the rates change. The 7/1 ARM means that, for seven years, the borrower's interest rate will remain fixed. That's a clear advantage the 7/1 ARM has over other ARMs with shorter fixed-rate periods.

  • Federal Housing Authority Loans (FHA)

    An FHA loan is a mortgage that is insured by the Federal Housing Administration. They are especially popular among first-time home buyers because they allow down payments of 3.5% for credit scores of 580+. However, borrowers must pay mortgage insurance premiums, which protects the lender if a borrower defaults.

  • HomeReady Loan

    HomeReady mortgages are a line of conventional home loans offered by Fannie Mae that are meant to help low- and moderate-income borrowers buy or refinance. HomeReady loans reduce the typical down payment and mortgage insurance requirements, but they're also more flexible about allowing contributions from other people.

  • Hard Money Loan (HML)

    A hard money loan is a specific type of asset-based loan financing through which a borrower receives funds secured by real property. Hard money loans are typically issued by private investors or companies.

  • Veteran Affairs Loan (VA)

    VA guaranteed loans are made by private lenders, such as banks, savings & loans, or mortgage companies to eligible veterans for the purchase of a home, which must be for their own personal occupancy. The guaranty means the lender is protected against loss if you or a later owner fails to repay the loan.

  • Personal Loans

    A personal or private mortgage is a loan made by an individual or a business that is not a traditional mortgage lender. As you evaluate the decision to use (or offer) a private mortgage, keep the big picture in mind.

How to Calculate Your Monthly Mortgage Payment

To start using the mortgage calculator, enter the relevant information about your mortgage, including the loan amount, interest rate, and loan term. You can also include your annual taxes and insurance for a more precise monthly payment estimate. Once you've entered all the required details, click on the "Calculate" button to generate an estimate of your monthly mortgage payment. The calculator will display the total amount you'll need to pay each month, along with a breakdown of how much of that amount goes towards taxes and insurance.

What is the Formula Used to Calculate Monthly Mortgage Payments

The variables of a mortgage formula are:

  • Principal (P): The amount of money borrowed from the lender.
  • Interest Rate (i): The percentage of the principal charged by the lender for borrowing the money. It is usually expressed as an annual percentage rate (APR), but for mortgage calculations, it is divided by 12 to get the monthly interest rate.
  • Loan Term (n): The length of time over which the loan is to be repaid. It is usually expressed in years, but for mortgage calculations, it is converted to the total number of monthly payments.
  • Monthly Mortgage Payment (M): The amount of money that needs to be paid each month to repay the loan.

For those of you who like crunching numbers instead of using our handy calculator, the formula looks like this:

M = P
i (1 + i)n
(1 + i)n - 1

What Are The Costs in a Mortgage Payment?

To get more specific about what the costs are in a mortgage, here’s what each cost means:

  • Principal: This is the amount of money that you borrowed to buy the property. Each mortgage payment reduces the principal amount owed.
  • Interest: This is the cost of borrowing money from a lender. The interest rate is determined by several factors, including your credit score, the size of your down payment, the type of mortgage you choose, and the macroeconomic environment.
  • Property taxes: These are taxes that are assessed by your local government on the value of your property. In many cases, your mortgage lender will collect these taxes as part of your monthly mortgage payment and pay them on your behalf.
  • Homeowner's insurance: This is insurance that protects your property against damage or loss. Your lender may require that you purchase homeowner's insurance as a condition of your mortgage.
  • Private Mortgage Insurance (PMI): If you make a down payment that is less than 20% of the purchase price of your home, your lender may require that you pay for private mortgage insurance. PMI protects the lender in case you default on your loan.
  • Homeowner's association fees: If you live in a neighborhood or community that has a homeowner's association (HOA), you may be required to pay monthly or annual HOA fees. These fees cover the cost of maintaining common areas and amenities, such as pools or parks.

How Our Mortgage Calculator Helps

Our online mortgage calculator can be extremely helpful if you are looking to purchase a home or refinance an existing mortgage. With this tool, you can input information such as the home price, down payment, loan term, interest rate, and property taxes to quickly and easily determine your monthly mortgage payments. This can be especially useful if you are comparing different mortgage options and want to see how different factors can affect your overall costs. With our BiggerPockets mortgage calculator, you can make informed decisions about your home financing and ensure you are getting the best deal possible.

How to Determine How Much House You Can Afford?

Figuring out how much house you can afford is an important first step in the home-buying process. To determine this, you'll need to take a few factors into account. First, consider your annual income and any other sources of income you have. As a general rule, you should aim to spend no more than 28% of your gross income on housing expenses. Next, factor in any existing monthly debts you have, such as credit card payments or car loans. Finally, decide on a down payment amount that you're comfortable with and a desired loan term and interest rate. Once you have all of this information, you can use an online mortgage calculator like the one offered by BiggerPockets to estimate the maximum home price you can afford based on your financial situation. By taking these steps and using helpful tools like a mortgage calculator, you can make informed decisions about your home-buying journey and find a home that fits comfortably within your budget.

How to Reduce Your Monthly Mortgage Payments

Paying off a mortgage can be a significant financial burden, but there are ways to reduce your monthly mortgage payment and make the process more manageable. Here are some tips on how you can reduce your monthly mortgage payment:

  1. Refinance: Refinancing involves taking out a new loan to pay off your existing mortgage, often with a lower interest rate or longer loan term. By refinancing, you can take advantage of a lower interest rate and reduce the amount of interest you pay over the life of the loan. However, it's important to weigh the costs of refinancing against the potential savings to ensure it makes financial sense for you.
  2. Make a larger down payment: A larger down payment can help reduce your monthly mortgage payment by reducing the amount of money you need to borrow. This can also help you qualify for a lower interest rate or avoid paying private mortgage insurance (PMI), which is typically required for borrowers who make a down payment of less than 20%. If you're not able to make a larger down payment initially, you may be able to pay down your principal faster to reach the 20% threshold and avoid PMI.
  3. Buy down points: When you buy down points, you pay an upfront fee to your lender to reduce your interest rate over the life of the loan. This can help you save money on interest and lower your monthly mortgage payment. However, it's important to weigh the costs of buying down points against the potential savings to ensure it makes financial sense for you.

By using these strategies, you can reduce your monthly mortgage payment and make the process of paying off your mortgage more affordable and manageable.

Frequently Asked Mortgage Questions

What Is a Refinance?

A refinance changes the terms of your loan. In most cases, it starts the loan clock over, too. A refinance can be used to pull equity (money) out of the home (called a cash-out refinance) and is typically used when rates have dropped.

How Do I Get a Mortgage Loan?

A mortgage loan is created by banks, credit unions, and other financial institutions. You can also work through a mortgage broker, who acts as a middleman and works to get you the best rates and terms by working with multiple banks.

What Is a Fixed Rate Mortgage?

A fixed rate mortgage means your interest rate will never change for the duration of the loan. When rates are low, it usually makes more financial sense to obtain a fixed rate loan.

What Is an Adjustable Rate Mortgage?

An adjustable rate mortgage (ARM) means your rate fluctuates with the market. Once per year your rate can go up or down, depending on the current market rate. Most ARM loans have an adjustment cap (typically 2%) so you don’t see wild swings in your rate. Most ARM loans have a set period of time that the interest rate is fixed. A 7-year ARM would mean the first 7 years are fixed, and the remaining time on the loan is subject to market fluctuations.

What Are Points on a Mortgage Loan?

A point is 1% of the mortgage loan amount and is typically used to “buy down the rate” of your loan. Points are paid upfront in exchange for a lower interest rate for your loan.

When Is the First Mortgage Payment Due?

Your first mortgage payment due date depends on the day you close on the home. If you close on or before the 9th of the month, your first payment is due the first of the next month. If you close on or after the 10th of the month, your first payment is due the first day of the second month following closing. (Example: Closing on or before May 9, first payment due June 1. Closing on or after May 10, first payment is due July 1.)

Which Mortgage Option Is Best for Me?

Everyone’s circumstances are different. Talk to your lender or mortgage broker to get different scenarios to see which one is the best fit for your specific needs.

What Does My Mortgage Payment Include?

Most mortgages are PITI loans—that stands for Principal, Interest, Taxes, Insurance. Principal is the monthly portion of the original amount borrowed. Interest is the monthly interest on the loan. Taxes are your property taxes. One-twelfth of the annual amount is collected every month to pay the taxes when they are due, typically the following year. Insurance is your property insurance.

What Happens After I Am Pre-Approved?

A pre-approval means that your financial information has been reviewed by a lender and a mortgage limit has been projected based on that information. After pre-approval, your lender will provide you a letter stating the loan amount you are preapproved for. Many sellers require this letter when accepting your offer.

What Credit Score Do I Need for a Mortgage Loan?

The higher your credit score, the better terms and rates you’ll be offered for your mortgage. FHA will typically go as low as 580 to still qualify for the lowest down payment option. 500-579 and you’ll need to have a larger down payment. You’re also much less likely to be approved for a loan at all. Conventional loans and VA loans require a 620 credit score. USDA loans require a 640 credit score.

What Documents Do I Need for a Mortgage Loan?

Your lender will ask for your last one to two months of paycheck stubs, the past two years of tax returns, and two months of bank statements. There may be additional documentation based on what these documents contain. Your lender wants proof of your income and your ability to make the down payment.

What Is the Difference Between Pre-Qualified & Pre-Approved?

Pre-qualified means the lender has looked at your financial information and determined that if that information is correct, you could potentially be approved for a loan. Pre-approved means the lender has run your credit and, if there are no changes, you will most likely be approved for a loan.

Explanation of terms

  • Interest rate

    The percentage of the loan amount that the lender charges the borrower for borrowing the money. It is expressed as an annual percentage rate (APR) and represents the cost of borrowing the funds. The interest rate can be either fixed, meaning it remains constant over the life of the loan, or adjustable, meaning it can change based on market conditions or specific terms outlined in the mortgage agreement.
  • Loan period

    The length of time the borrower has to repay the mortgage in full. This period is typically expressed in years, with common loan terms being 15, 20, or 30 years. The loan term affects the size of the monthly payments and the total amount of interest paid over the life of the loan. Generally, a longer loan term results in lower monthly payments, but a higher total interest cost, while a shorter loan term leads to higher monthly payments and a lower total interest cost.
  • Down payment

    An upfront payment made by the borrower when purchasing a home. It represents a percentage of the home's total purchase price and serves as the borrower's initial equity stake in the property. The down payment reduces the loan amount the borrower needs to finance through the mortgage. Generally, a larger down payment results in lower monthly mortgage payments and can help the borrower qualify for more favorable loan terms, such as a lower interest rate. Common down payment amounts range from 3.5% to 20% of the home's purchase price, depending on the type of mortgage and the borrower's financial situation.
Learn More About Mortgage Loans