Mortgage Calculator | Bankrate (2024)

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6 steps to calculate your payments using a mortgage calculator

Here’s how to use our mortgage calculator to easily estimate payments:

  1. Enter your home price. In the Home price field, input the price of the home you’re buying (or the current value of your home if you’re refinancing).
  2. Enter your down payment. In the Down payment field, input the amount of your down payment (if you're buying) or the amount of equity you have (if you're refinancing). You can input either a dollar amount or percentage.
  3. Enter your loan term. In the Loan term field, enter the length of your loan — usually 30 years, but could be 20, 15 or 10.
  4. Enter your interest rate. In the Interest rate field, input the rate you expect to pay or are currently paying. Our calculator defaults to the current average rate, but you can adjust this percentage.
  5. Enter your ZIP code. In the ZIP code field, input your zip code.
  6. Click Update.

Bankrate's calculator also estimates property taxes, homeowners insurance and homeowners association fees. You can edit these amounts, or even edit them to zero, as you're shopping for a loan.

In addition, the calculator allows you to input extra payments (under the “Amortization” tab). This can help you decide whether to prepay your mortgage and by how much.

Typical costs included in a mortgage payment

The major part of your mortgage payment is the principal and the interest. The principal is the amount you borrowed, while the interest is the sum you pay the lender for borrowing it. Your lender also might collect an extra amount every month to put into escrow, money that the lender (or servicer) then typically pays directly to the local property tax collector and to your insurance carrier.

  • Principal: This is the amount you borrowed from the lender.
  • Interest: This is what the lender charges you to lend you the money. Interest rates are expressed as an annual percentage.
  • Property taxes: Local authorities assess an annual tax on your property. If you have an escrow account, you pay about one-twelfth of your annual tax bill with each monthly mortgage payment.
  • Homeowners insurance: Your insurance policy can cover damage and financial losses from fire, storms, theft, a tree falling on your home and other hazards. If you live in a flood or other disaster-prone zone, you'll have an additional policy. As with property taxes, you pay one-twelfth of your annual insurance premium each month, and your lender or servicer pays the premium when it's due.
  • Mortgage insurance: If you’re getting a conventional or FHA loan and your down payment is less than 20 percent of the home's purchase price, you'll pay mortgage insurance premiums, which are also added to your monthly payment.

Mortgage payment formula

For the mathematically inclined, here's a formula to help you calculate mortgage payments manually:

M = P

r (1 + r)n

(1 + r)n- 1

Symbol
MTotal monthly mortgage payment
PPrincipal loan amount
rMonthly interest rate: Lenders provide you an annual rate so you’ll need to divide that figure by 12 (the number of months in a year) to get the monthly rate. If your interest rate is 5 percent, your monthly rate would be 0.004167 (0.05/12=0.004167).
nNumber of payments over the loan’s lifetime: Multiply the number of years in your loan term by 12 (the number of months in a year) to get the number of payments for your loan. For example, a 30-year fixed mortgage would have 360 payments (30x12=360).

This formula can help you crunch the numbers to see how much house you can afford. Alternatively, you can use this mortgage calculator to help determine your budget.

Terms explained

An online mortgage calculator can help you quickly and accurately predict your monthly mortgage payment with just a few pieces of information. It can also show you the total amount of interest you’ll pay over the life of your mortgage.

Here are some useful terms to understand when evaluating your mortgage:

  • Home price: This is the dollar amount you expect to pay for a home.
  • Down payment: This is the portion of the home’s price you’re not financing with a mortgage. For many borrowers, this is as little as 3 percent.
  • Principal: This is the amount you borrowed from the lender, or your home price minus the down payment.
  • Interest: This is what the lender charges you to lend you the money. Interest rates are expressed as an annual percentage.
  • Loan term: This is the length of the mortgage repayment term, such as 30 years or 15 years.
  • Property taxes: Local authorities assess an annual tax on your property. If you have an escrow account, you pay about one-twelfth of your annual tax bill with each monthly mortgage payment.
  • Homeowners insurance: Your insurance policy can cover damage and financial losses from fire, storms, theft, a tree falling on your home and other hazards. If you live in a flood or other disaster-prone zone, you'll have an additional policy. As with property taxes, you pay one-twelfth of your annual insurance premium each month, and your lender or servicer pays the premium when it's due.
  • Mortgage insurance: If you’re getting a conventional or FHA loan and your down payment is less than 20 percent of the home's purchase price, you'll pay mortgage insurance premiums, which are also added to your monthly payment.

Ways a mortgage calculator can help

Our mortgage calculator can help guide many of the decisions related to buying a home or refinancing your mortgage, such as:

  • Whether you're spending more than you can afford: Use the calculator to see how much you’ll pay each month, including in homeowners insurance premiums and property taxes. This can help you determine if you’re stretching your homebuying budget too far, or paying too much in terms of debt-to-income (DTI ratio).
  • Whether your budget allows for a shorter-term loan: Use the calculator to compare the monthly payments and total interest between a 10-, 15-, 20- or 30-year loan. Shorter-term loans come with lower interest rates, but higher monthly payments.
  • Whether you should put more or less money down: Use the calculator to weigh different down payment scenarios and how that’ll affect how much you’ll borrow and pay.
  • Whether you should pay off your mortgage early: Use the calculator to learn how extra payments can impact how quickly you’ll repay the loan and any interest savings.
  • When you can get rid of mortgage insurance: Use the calculator’s amortization schedule to determine when you’ll hit 20 percent equity — the magic number you need on a conventional loan to request that your lender remove private mortgage insurance (PMI).

Deciding how much house you can afford

If you're not sure how much of your income should go toward housing, start with the 28/36 rule, which dictates you spend no more than 28 percent of your gross income on housing costs and no more than 36 percent of your gross income on overall debt, including housing costs.

Say Joe makes $60,000 a year. That's a gross monthly income of $5,000 a month. Twenty-eight percent of that equals $1,400. If Joe were to abide by the 28/36 rule, he’d spend no more than $1,400 on a mortgage payment each month.

Meeting the 28/36 rule isn’t always doable or desirable, however.

“Many prospective homeowners are tempted to 'stretch' when buying a home since it can literally be the culmination of a dream,” says Mark Hamrick, Bankrate senior economic analyst. “At the same time, given that this is one of the most expensive and consequential purchases of a lifetime, the transaction needs to co-exist with our many other financial goals including saving for retirement, saving for emergencies and paying down debt.

“Being conservative and cautious with a home purchase is advisable,” Hamrick says. “If it turns out that income rises down the road, that presents an opportunity to sock money away to pay for repairs, maintenance and renovations later.”

How to lower your monthly mortgage payment

If the monthly payment you're seeing in our calculator looks a bit out of reach, you can try some tactics to reduce the hit. Play with a few of these variables:

  • Choose a longer loan. With a longer term, your payment will be lower (but you'll pay more interest over the life of the loan).
  • Spend less on the home. Borrowing less translates to a smaller monthly mortgage payment.
  • Shop for a lower interest rate. Be aware, though, that some super-low rates require you to pay points, an upfront cost.
  • Make a bigger down payment. This is another way to reduce the size of the loan.

Learn more: How to lower your mortgage payment

Next steps on getting a mortgage

A mortgage calculator is a springboard to help you estimate your monthly mortgage payment and understand what it includes. Once you have a good idea of your budget, you might move on to these next steps:

  • Get a mortgage prequalification or preapproval.
  • Shop for homes and make an offer.
  • Apply for a mortgage.

Compare mortgage rates for different loan types

Loan TypePurchase RatesRefinance Rates
30-Year Loan30-Year Mortgage Rates30-Year Refinance Rates
20-Year Loan20-Year Mortgage Rates20-Year Refinance Rates
15-Year Loan15-Year Mortgage Rates15-Year Refinance Rates
10-Year Loan10-Year Mortgage Rates10-Year Refinance Rates
FHA LoanFHA Mortgage RatesFHA Refinance Rates
VA LoanVA Mortgage RatesVA Refinance Rates
ARM LoanARM Mortgage RatesARM Refinance Rates
Jumbo LoanJumbo Mortgage RatesJumbo Refinance Rates
The table above links out to loan-specific content to help you learn more about rates by loan type.
Mortgage Calculator | Bankrate (2024)
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