Mortgage Calculator
Calculate mortgage payments
Frequently Asked Questions
How is a mortgage payment calculated?
Monthly payment uses the formula: M = P × r(1+r)^n / ((1+r)^n - 1). For a $300,000 mortgage at 6.5% for 30 years: monthly payment is $1,896.20 (principal and interest only, excluding taxes and insurance).
What is included in a total mortgage payment?
PITI: Principal (loan repayment), Interest (lender's charge), Taxes (property tax, typically 1-2% of home value annually), and Insurance (homeowner's insurance). PMI is added if down payment is less than 20%.
How much house can I afford?
The 28/36 rule suggests: housing costs should not exceed 28% of gross monthly income, and total debt should not exceed 36%. With $8,000 monthly income, aim for a maximum payment of $2,240 including taxes and insurance.
Should I choose a 15-year or 30-year mortgage?
15-year: higher payments ($2,582 vs $1,896 on $300K at 6.5%), but saves $186,000 in total interest and typically offers 0.5-0.75% lower rates. 30-year: lower payments provide more monthly flexibility and cash flow.
What is PMI and how do I avoid it?
Private Mortgage Insurance protects the lender if you default. It is required when your down payment is less than 20%. PMI costs 0.5-1.5% of the loan annually ($125-$375/month on $300K). It is removed once equity reaches 20%.