Calculate monthly payments and see how much house you can afford.
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A mortgage is a loan used to purchase or refinance a home, where the property itself serves as collateral. Mortgages are typically the largest financial commitment most people ever make, so understanding how they work is crucial for making informed decisions about homeownership.
When you take out a mortgage, you agree to repay the loan principal plus interest over a set period, typically 15 or 30 years. Your monthly payment is calculated to pay off both the interest and principal by the end of the loan term. Early in the loan, most of your payment goes toward interest; over time, more goes toward principal—this is called amortization.
Key mortgage components:
The total of these components is often called PITI (Principal, Interest, Taxes, Insurance)—your true monthly housing cost. This calculator helps you understand all these costs so you can budget accurately for homeownership.
Our mortgage calculator gives you a complete picture of your monthly payment and total loan costs. Here's how to use each input:
The results show your complete monthly payment breakdown, total interest paid over the loan term, and how extra payments can accelerate payoff.
Conventional Loans
Not backed by the government. Typically require 620+ credit score and 3-20% down payment. PMI required with less than 20% down. Best rates for those with excellent credit and substantial down payments.
FHA Loans
Government-backed loans with lower requirements: 580+ credit score and 3.5% minimum down payment. Mortgage insurance required for the life of the loan. Popular with first-time buyers.
VA Loans
For eligible veterans, active military, and surviving spouses. No down payment required, no PMI, and competitive interest rates. One of the best mortgage options available if you qualify.
USDA Loans
For homes in eligible rural areas. No down payment required with income limits based on location. Lower mortgage insurance than FHA. Great option for qualifying rural and suburban buyers.
Jumbo Loans
For loan amounts exceeding conforming loan limits ($766,550 in most areas for 2024). Stricter requirements including higher credit scores, lower debt-to-income ratios, and larger reserves.
How much house can I afford?
A common guideline is the 28/36 rule: spend no more than 28% of gross monthly income on housing costs (PITI) and no more than 36% on total debt. For a $6,000 monthly income, that's $1,680 maximum for housing. However, consider your full financial picture including savings goals and lifestyle costs.
15-year vs. 30-year mortgage: which is better?
A 15-year mortgage has higher monthly payments but saves substantial interest. A $400,000 loan at 7% costs about $3,500/month for 15 years vs. $2,660/month for 30 years—but total interest is $230,000 vs. $558,000. Choose 15-year if you can afford it; otherwise, 30-year with extra payments offers flexibility.
What is PMI and how do I avoid it?
Private Mortgage Insurance protects the lender if you default. It's required with less than 20% down and typically costs 0.5-1% of the loan annually. Avoid it by putting 20% down, or request removal once you reach 20% equity. Some lenders offer "lender-paid PMI" with a slightly higher interest rate.
How do extra payments help?
Extra payments go directly to principal, reducing your balance faster and cutting total interest. Paying an extra $200/month on a $400,000, 30-year loan at 7% pays it off 7 years early and saves over $130,000 in interest. Even one extra payment per year makes a significant difference.
Should I buy points to lower my rate?
Mortgage points let you pay upfront to reduce your interest rate. One point costs 1% of the loan and typically reduces the rate by 0.25%. It makes sense if you'll stay in the home long enough to recoup the cost through lower payments—typically 4-7 years. Calculate your break-even point before deciding.
What credit score do I need for a mortgage?
Minimum scores vary: FHA requires 580 (or 500 with 10% down), Conventional typically requires 620, and the best rates require 740+. Before applying, check your credit reports for errors, pay down credit card balances, and avoid opening new accounts.
What are closing costs and how much should I expect?
Closing costs include lender fees, title insurance, appraisal, and prepaid taxes/insurance. Expect 2-5% of the loan amount. On a $400,000 loan, that's $8,000-$20,000. Some costs are negotiable, and sellers sometimes cover a portion. Ask for a Loan Estimate from each lender to compare.
Get quotes from at least 3-5 lenders. Even 0.125% rate difference can save thousands. All credit inquiries within 45 days count as one inquiry.
Pre-approval shows sellers you're serious and helps you understand your true budget. It's different from pre-qualification, which is less thorough.
Budget for closing costs (2-5%), moving expenses, and an emergency fund. Don't drain all savings for the down payment.
Lock your rate when satisfied—rates can change daily. Closing at month's end can reduce prepaid interest costs at closing.