This is a typical mortgage calculator for fixed-rate mortgage loans. This calculator has graphing capabilities and can also display either monthly or annual amortization schedules based on the loan starting date. You can also add property taxes, PMI (Private Mortgage Insurance) costs, and all other related fees to calculate your total monthly out-of-pocket cost.
A mortgage is a loan secured by a property – usually a real estate property. A real estate mortgage includes the following key components:
- Loan Amount—the amount you borrow from your lender or bank. The loan amount you can borrow normally correlates to your household income or affordability. To estimate the amount you can afford, please use our House Affordability Calculator.
- Down Payment—a percentage of the total amount of the loan, to be paid upfront. In the United States, if the down payment is less than 20% of the total property price, a PMI normally must be purchased until the principal arrives at less than 80% of the total property price. The PMI rate normally ranges from 0.5%-2% (typically 1%) of the total loan amount, depending on various factors. Additionally, banks normally will not give you a good interest rate if your down payment is less than 20%.
- Loan Terms—the length of time you have to repay the loan. Typical loan terms in the United States vary from 30 years, 20 years, 15 years, 10 years, 5 years, and so forth. Normally, the shorter the loan term, the lower the interest rate.
- Interest Rate—the interest rate of a mortgage can be "fixed" (otherwise known as a fixed-rate mortgage, or FRM), or "adjustable" (otherwise known as an adjustable rate mortgage, or ARM). For ARMs, the interest rate is generally fixed for a period of time, after which it will periodically "adjust," based on market indices. An ARM transfers part of the risk to the borrower; therefore, the initial interest rate is normally 0.5% to 2% lower than a 30-year fixed rate, for example.
- Repayment—the most common way to repay a mortgage loan is to make monthly, fixed payments to the lender. The payment contains both the principal and the interest. For a 30-year loan, the majority of the payments you make in the first few years will cover the interest.
The total cost of owning a home is more than just the monthly payment, or the mortgage. When planning to purchase a home, you should also consider other necessities and extras, such as real estate tax, management fees, utilities, home maintenance costs, and so on. The annual real estate tax in the United States varies per location, ranging from 0% to 4% of the total property value. Home maintenance costs can be expensive, as well. In fact, it is not uncommon to spend 1% of your total property value for home repairs each year.