The table below shows how the size of your down payment will affect your monthly mortgage payment. Additionally, some lenders have programs offering mortgages with down payments as low as 3% to 5%. For example, VA loans don’t require down payments and FHA loans often allow as low as a 3% down payment (but do come with a version of mortgage insurance). In general, a 20% down payment is what most mortgage lenders expect for a conventional loan with no private mortgage insurance (PMI). The number you’re left with is your DTI.ĭTI = Total Monthly Debt Payments ÷ Gross Monthly Income x 100 Down Payment Next, divide by your monthly, pre-tax income. To calculate your DTI, add all your monthly debt payments, such as credit card debt, student loans, alimony or child support, auto loans and projected mortgage payments. The higher the ratio, the less likely it is that you can afford the mortgage. This ratio helps your lender understand your financial capacity to pay your mortgage each month. The rule states that you should aim to for a debt-to-income (DTI) ratio of roughly 36% or less (or 43% maximum for a FHA loan) when applying for a mortgage loan. A percentage you may hear when buying a home is the 36% rule. Home price, the first input, is based on your income, monthly debt payment, credit score and down payment savings. The numbers can always be adjusted later.įor a more detailed monthly payment calculation, click the dropdown for “Taxes, Insurance & HOA Fees.” Here, you can fill out the home location, annual property taxes, annual homeowners insurance and monthly HOA or condo fees, if applicable. Don’t worry if you don’t have exact numbers to work with - use your best guess. In the dropdown box, choose your loan term. There are three fields to fill in: home price, down payment and mortgage interest rate. The first step to determining what you’ll pay each month is providing background information about your prospective home and mortgage.
N = Number of Monthly Payments for 30-Year Mortgage (30 * 12 = 360, etc.) How to Use Our Mortgage Payment Calculator P = Principal Amount (initial loan balance) The Math Behind Our Mortgage Calculatorįor those who want to know exactly how our calculator works, we use the following formula for our mortgage calculations:
To find a financial advisor who serves your area, try our free online matching tool. You can also try our how much house I can afford calculator if you’re not sure how much money you should budget for a new home.Ī financial advisor can aid you in planning for the purchase of a home.
You can adjust the home price, down payment and mortgage terms to see how your monthly payment will change. Amortization is when a certain amount is repaid periodically, including interest.Use SmartAsset’s mortgage calculator above to estimate your monthly mortgage payment, including your loan's principal, interest, taxes, homeowners insurance and private mortgage insurance (PMI).A fixed amount is paid regularly for a shorter time until the final payment is due, which will be substantially higher.A Balloon Mortgage is a long-term mortgage at a low interest rate.They are also popular among small business owners due to them not having the funds to get a property to run their business from. 'Balloon Mortgages' are commonly taken out for commercial properties due to startup business owners having faith in their business plan and believing they will have sufficient funds when the time comes to pay the final payment. If a 'Balloon Mortgage' is taken out for a real estate property, the lender will most likely ask for proof of a financial plan to demonstrate how the recipient plans on paying the final payment. A 'Balloon Mortgage' is commonly found when it comes to commercial real estate, such as startup business owners, rather than residential real estate, such as future homeowners. The final payment of a 'Balloon Mortgage' is very large compared to the previous payments. A 'Balloon Mortgage' allows you to pay smaller payments throughout the time of the mortgage, although it results in a larger balance once the mortgage has matured. A 'Balloon Mortgage' does not reduce over the chosen term of the mortgage. This free balloon mortgage calculator will help you calculate your final balloon payment amount for a mortgage with a balloon payment.īalloon Mortgages, compared to other types of mortgages, aren't as common as other mortgages.