Mortgage Calculator

For prospective homebuyers and homeowners, the mortgage calculator is a potent planning tool that provides valuable insights into the costs associated with taking out a mortgage loan. With this tool, you can make informed, rational decisions about your housing finances, making your goal of purchasing your dream home realistic and attainable.

What is a Mortgage Calculator?

A mortgage calculator is an automated financial tool designed to help you accurately estimate the monthly mortgage payments, the overall interest paid, and the total cost of a home loan. Based on the values you input for specific variables, including the Home price, Down payment, Loan term, Estimated interest rate, and maybe other fees, you can immediately see how much you will need to pay each month until the end of the loan term.

By adjusting the values input for different variables, you can easily compare diverse loan scenarios and see how each variable, like different loan terms, down payment, or interest rates, influences your monthly payment and the total cost of the mortgage. Notably, the tool also offers a detailed Amortization Schedule Breakdown; by looking at this table, you can visualize how your regular payments gradually reduce the loan balance over the life of the loan.

How to Use a Mortgage Calculator

Our free Mortgage Calculator is intuitive, simple, and easy to use. It takes just a few steps and some seconds to enter the required input and then receive the detailed mortgage calculation results. However, it can be a bit challenging to correctly input data if you are not familiar with the key terms associated with the tool.

Mortgage Calculator’s Key Terms Explained

Here’s a look at the explanation of key terms in the mortgage loan calculator:

In the Input fields:

1. Home price:

It’s the initial value of the property or the amount of money you need to pay to purchase the house or property. Please note that the home price is not the same as the principal. The principal, in fact, refers to the amount of money that you borrow to buy the house and the base loan amount upon which interest is calculated.

2. Down payment:

This term refers to the upfront payment you make to buy a house or a property. A down payment is typically a percentage of the overall purchase price and is paid at the time of the transaction. The amount of the down payment affects the total amount of the principal loan, or the amount of money to borrow. The lower the mortgage down payment, the higher the principal, and vice versa.

3. Loan term:

It refers to the duration needed to 100% pay off the mortgage loan. For a mortgage loan, the loan term is quite long, commonly between 15 and 30 years.

4. Interest rate:

It signifies a percentage (%) of the loan amount the lender charges for borrowing their money. In other words, the interest rate determines the cost of borrowing the mortgage loan. The lower the mortgage interest rate, the lower the cost of the loan, and vice versa.

5. Tax and fees:

Unlike some other types of loans, borrowers need to pay certain additional taxes and fees when applying for a mortgage loan. They may include:

• Property Taxes:

This is a tax on physical property, including real estate, often determined and charged by local governments. Property taxes are included in mortgage payments, and homeowners pay them through an escrow account.

• Homeowner’s Insurance:

Homeowner’s Insurance: It's a type of property insurance that covers damages and losses to your home and its contents caused by unexpected events, including fire, theft, natural disasters, etc. As with property taxes, the cost of homeowner’s insurance is often within the mortgage payment.

• PMI insurance:

PMI insurance, standing for Private Mortgage Insurance, is a financial safeguard for lenders in case the borrower is unable to make payments on the mortgage loan. This type of insurance is required if you make a down payment of less than 20 percent of a home's purchase price.

• Homeowners associations (HOA) fees:

HOA fees, or Homeowners associations fees, are recurring payments that you may need to make to your HOAs to assist them with the maintenance and management of all properties. It’s worth noting that these fees aren’t part of the mortgage loan itself.

In the “Mortgage Calculation Results” section:

6. Monthly Payments:

Monthly payment is the amount of money you have to pay to your lender every month over the life of your mortgage loan. Note that monthly payments include both interest and principal.

7. Total principal paid:

It’s the amount or the original sum the lender lends you for the mortgage loan.

8. Total interest paid:

This refers to the total amount you need to pay to your lender in addition to the total principal paid as the cost of borrowing the money.

9. Total payment:

Total payment is the total amount of money you’ll need to pay over the life of your loan, including principal, interest, and other taxes, insurance, and fees.

10. Amortization Schedule Breakdown:

It’s a detailed table listing payment dates and corresponding payment amounts, the interest paid, the principal paid, and the remaining loan balance after each payment. Looking at the amortization schedule breakdown, you can instantly gain a clear illustration of how each of your recurring payments helps reduce the loan balance over the whole life of your mortgage loan.

Step-by-step instructions on how to use a Mortgage Calculator

Step 1. Enter the required data into the respective input fields, including the Home price, Down payment, Loan term, Estimated interest rate, and Start date.

Note: If you want to include taxes, insurance, and fees in the loan, click on or tap “Optional: Taxes, insurance, HOA fees” to reveal more input fields.

Step 2. Press the Calculate button and wait a moment for the mortgage calculation results.

Step 3. Receive your mortgage calculation results.

Step 4. Adjust your mortgage calculation results if needed.

To make any changes to the results, simply go back to the mortgage calculator’s input fields and make adjustments to the values for variables such as home price, down payment, loan term, estimated interest rate, start date, etc. Next, press the Calculate button again to see the new results.

Note: You can use the “Add extra payments” feature underneath the result section to see how extra money repayments affect your monthly payments, total interest, and amortization schedule.

Step 5 (optional). Press the Reset button to clear all the values you’ve inputted.

Benefits of Using a Mortgage Calculator

A mortgage calculator comes with a bunch of benefits and advantages, such as the following:

• Giving clarity about the loan

Even with a simple mortgage calculator, you can accurately estimate all the essential values related to your mortgage loan and loan payments, from monthly payments to total interest paid, amortization schedule breakdown, and more, based on your input. This way, you can assess your financial capability, get a measure of how much house and price range you can afford, and plan your budget effectively.

• Helping you explore different loan scenarios

A mortgage calculation tool always lets you adjust your inputs for factors such as home price, down payment, loan term, interest rate, etc. so that you can see how each of these factors affects your monthly and total payments and total interest as well. This allows you to compare different loan choices and make well-informed decisions about the most suitable loan for your needs.

• Allowing you to see the influence of the down payment

Using the home mortgage calculator, you can easily adjust your down payment and see how this factor could affect your monthly payment, total payment, and overall interest paid. More importantly, you can also quickly find out how much of the down payment can help you avoid Private Mortgage Insurance and save more each month.

• Assisting you in financial planning

The tool offers accurate estimates of the loan-related values and a detailed amortization schedule breakdown based on your inputs. Looking at these results, you can visualize how your loan balance changes over time, assisting you in tracking the progress, planning for your finances effectively, and achieving your homeownership dreams.

FAQs about the Mortgage Calculator

Is the mortgage calculator always accurate?

Mortgage calculators, without a doubt, are powerful tools designed to offer precise mortgage calculation results. However, it’s hard to say the mortgage calculator is always accurate since the accuracy of its output depends on the correctness of the input values. In addition, even the best mortgage calculators with extra payments are unable to correctly account for the subtle differences in costs associated with purchasing a home.

What is the monthly payment on a $100,000 mortgage?

Assuming an estimated interest rate of 7% and a 15-year loan, the estimated monthly payment for a $100,000 mortgage is $898.83. But it’s worth noting that this number may change significantly depending on your loan term, interest rate, additional taxes and fees, etc.

How does the interest rate work on a mortgage?

The interest rate considerably affects the amount of your monthly mortgage payments and the total amount you will pay over the duration of the loan. Higher interest rates result in higher monthly payments, interest paid, and the overall cost of the mortgage loan, and vice versa.

Conclusion

The mortgage calculator is a robust tool for anyone who wants to buy a home. It can help prospective homebuyers estimate their monthly payments, compare diverse loan options, and plan budgets effectively. However, it’s crucial to note that a mortgage amortization calculator is never a substitute for professional financial advice. You should always consult with a lender or your financial advisor before taking out a mortgage.