Mortgage calculator with taxes and insurance

How to calculate your mortgage payment

• M = the total monthly mortgage payment.
• P = the principal loan amount.
• r = the monthly interest rate. This is the annual rate that your lender provides divided by 12 months.
• n = the number of monthly loan payments. This is the number of years of your loan multiplied by 12.
To see this formula in practice, let's say you're purchasing a $200,000 home with a 30-year loan and putting down 20 percent. The lender offers an interest rate of 4 percent. To calculate "P," You would first subtract 20 percent from the $200,000 home price to get a total amount borrowed of $160,000. Then, to calculate your monthly interest rate, or "r," you would divide the annual interest rate by 12. In this scenario, the monthly interest rate would be .0033 percent. Finally, to get "n," you would multiply your loan term by 12 to get the total number of months for your mortgage, which in this case would be 360. Your monthly principal and interest payments would be around $763. Homeowners insurance and property taxes are not included.

How much house can you afford?

Lenders typically don't want your home debt-to-income ratio to exceed 28 percent. To determine your DTI ratio, divide your monthly mortgage payment, including taxes and insurance, by your gross monthly income. Multiply the result by 100. For example, if your housing expenses will be $2,000 and your monthly household income before withheld taxes is $7,000, your DTI ratio would be about 28.6 percent (2,000 -:- 7,000 x 100 = 28.57 percent).

Before doing business with you, lenders also consider your other monthly debt obligations along with your projected housing expenses. For example, if your monthly expenses include $300 for a car loan, $75 in student loan payments and $125 in credit card bills, you would add these to your $2,000 housing expenses for a total of $2,500. Divide that figure by your $7,000 gross income to arrive at a 35.7 percent ratio. Lenders prefer this so-called "back-end" debt-to-income ratio to be 36 percent or less.

Generally, the smaller your monthly mortgage expense relative to your income, the easier it will be for you to keep up with your payments.

Keep in mind that your monthly payment will increase over the years since taxes and home insurance costs tend to go up rather than down. Financial institutions keep an escrow account to track these and other related costs, such as private mortgage insurance. Lenders provide borrowers with an analysis of the escrow account on an annual basis, showing any projected shortfalls or excess funds for the coming year. Remember, while lenders can provide you with options for financing a home, they don't have a full picture of your financial life. When considering how much house you can afford, it's important to take into consideration all of your current expenses, upcoming expenses and how you manage your money. It’s not a great idea to borrow the maximum the lender will approve you for. By living below your means, you’ll be able to set aside money for life’s other goals, like retirement and education expenses.



Cut your loan costs by prepaying principal

This PITI calculator offers another feature that can help you cut your loan costs. See how adding additional principal payments can shorten the life of the loan by years. Determine if you could add to your payment on a monthly or yearly basis, or even just one time. Hit "view results" to see a side-by-side comparison of your regular payment schedule versus the prepayment payment schedule.

This mortgage calculator with taxes and insurance will show you just how much you'll be paying in interest for the life of the loan under both scenarios, as well as how much you can save by making extra principal payments along the way.



FAQs

What are the monthly costs built into a mortgage payment?

The total monthly cost of a mortgage is comprised of more than just the principal and interest. Property taxes, homeowners insurance and mortgage insurance (if you put less than 20 percent down on the property) can be lumped into the monthly payment as well. HOA fees, though part of the monthly cost of homeownership, are often paid separately. Those expenses are all ongoing. But there are also upfront costs to consider when getting a mortgage, including lender charges, closing costs, taxes and prepaid expenses like escrow.

Can I lower my mortgage payment?

There are numerous ways to lower your mortgage payment. Using a mortgage payment calculator can help you figure out which method is right for you.Here are a few ways in which you can lower your mortgage payment:

• Increase your down payment. The less you owe on a home, the lower your monthly mortgage payment will be. Using the mortgage calculator, decrease the mortgage amount to see what it does to your monthly payment.
• Put at least 20 percent down. Lenders typically require you to have private mortgage insurance if you put less than 20 percent down on a home, which will bump up the amount you pay each month.
• Lengthen your loan term. You can lower your mortgage payment by increasing your loan term. In turn, you'll pay more in interest over the life of the loan. Use the mortgage calculator to experiment with various term scenarios ­— pay attention to what it does to your monthly payment and total interest.
• Shop around for interest rates. Finding the lowest interest rate possible will not only lower your monthly payments, it can significantly reduce the interest you pay over the life of the loan. Get quotes from multiple lenders in order to improve your chances of finding a great rate.
• Refinance your home. If you already have a mortgage, shopping for a new one, especially when rates are low, can significantly lower your monthly mortgage payment. When refinancing, extending the term of your mortgage, finding a lower rate or paying down some of the principal balance of your overall mortgage can all play a part in lowering your mortgage payment.

Can my monthly payment go up?

If you have a fixed-rate mortgage, your principal and interest payments won't rise. However, property taxes and homeowners insurance premiums tend to increase over time, which can boost the monthly cost of your mortgage. Other expenses, like HOA fees, can also increase and impact how much you pay on a monthly basis. You could also see your monthly payment climb if you have an adjustable-rate mortgage.

How do interest rates impact your mortgage payment?

Interest rates affect how much home you can afford. The higher your interest rates, the higher your monthly mortgage payment and the more interest you'll pay over the life of a loan.

How long of a loan term should I get?

The term you choose depends heavily on what your budget allows and personal preference. Generally, longer loan terms come with lower monthly payments, allowing for more cash flow but costing more in interest over the life of the loan. Shorter loan terms generally come with higher monthly payments than longer-term loans of the same amount, but they can be a good option for those who have sufficient cash flow and want to pay off their mortgage faster with less interest. Choose the term that best fits your financial situation and goals.

How much of a down payment should I make?

Down payments have a big impact on the type of loan you can get, the cost of the loan and the interest rate you receive. Many lenders and loan types require that you make a down payment of at least 5 percent. Yet some conventional loans allow for down payments as low as 3 percent. FHA loans allow you to make a down payment of just 3.5 percent, and VA loans often don't require a down payment at all. However, the best way to keep costs low is to put down at least 20 percent. Doing so will keep you from paying private mortgage insurance and significantly lower your monthly payment. To figure out how much you can realistically put down on a home, the Consumer Financial Protection Bureau suggests adding up your total available funds and then deducting moving costs, renovations, outside savings goals and your emergency fund. After that, subtract your estimated closing costs from your total available funds—closing costs are generally 2 to 5 percent of the home purchase price—to determine your maximum down payment amount.

How much are closing costs?

You'll need to factor closing costs into the overall price of your loan. According to Bankrate's 2017 Closing Costs Survey, U.S. homebuyers pay an average of $2,084 in origination and third-party fees. These costs vary by location, with states like New York and Hawaii bringing up the national average. Broadly speaking, however, closing costs range from 2 percent to 5 percent of the purchase price of a home.

About our Mortgage Rate Tables

The above mortgage loan information is provided to, or obtained by, Bankrate. Some lenders provide their mortgage loan terms to Bankrate for advertising purposes and Bankrate receives compensation from those advertisers (our "Advertisers"). Other lenders' terms are gathered by Bankrate through its own research of available mortgage loan terms and that information is displayed in our rate table for applicable criteria. In the above table, an Advertiser listing can be identified and distinguished from other listings because it includes a "Next" button that can be used to click-through to the Advertiser's own website or a phone number for the Advertiser.

Fixed Rates

• 10 year fixed
• 10 year fixed refi
• 15 year fixed
• 15 year fixed refi
• 20 year fixed
• 20 year fixed refi
• 30 year fixed
• 30 year fixed refi
• 30 year FHA
• 30 year FHA refi

Adjustable Rates

• 1 year ARM
• 1 year ARM refi
• 3/1 ARM
• 3/1 ARM refi
• 5/1 ARM
• 5/1 ARM refi
• 7/1 ARM
• 7/1 ARM refi
• 10/1 ARM
• 10/1 ARM refi

Interest Only Rates

• 3/1 ARM (IO)
• 5/1 ARM (IO) refi
• 5/1 ARM (IO)
• 7/1 ARM (IO) refi
• 7/1 ARM (IO)
• 30 year (IO) refi
• 30 year fixed (IO)
• 3/1 ARM (IO) refi