About Mortgage Calculator

A mortgage calculator is an online tool that helps homeowners or prospective homeowners calculate their mortgage payments based on key inputs such as the loan amount, interest rate, loan term, and other costs like property taxes, insurance, and HOA fees. It is designed to give you a clear picture of your monthly payments and how much house you can afford.

By adjusting the loan amount, term, or interest rate, you can compare scenarios and plan your budget more effectively before committing to a mortgage.

Mortgage Calculator Formula

The mortgage calculator formula calculates the monthly payment required to repay a mortgage loan based on the loan amount, interest rate, and loan term. The standard formula is:

• M = Monthly Payment
• P = Loan Principal (amount borrowed)
• i = Monthly Interest Rate (annual rate ÷ 12)
• n = Total Number of Payments (loan term × 12)

Mortgage Calculator Amortization

Mortgage calculator amortization refers to the process of spreading out your mortgage loan into fixed monthly payments. Each monthly payment consists of two parts: principal and interest.

• In the early years, a larger portion of your payment goes toward interest.
• Over time, more of your payment applies to the loan balance (principal).

Amortization schedules help borrowers understand how much equity they will build over time and how much interest they will pay throughout the life of the loan.

Principal & Interest

In the context of a mortgage, "Principal & Interest" refers to the two key components of your monthly mortgage payment:

• Principal – The portion of your payment that goes toward reducing the original loan balance.
• Interest – The portion that pays the lender for borrowing the money.

Property Tax

Property tax is a tax assessed on real estate by the local government. The amount is based on the property’s assessed value and the local tax rate.

Many lenders include property tax in your monthly mortgage payment through an escrow account, ensuring the taxes are paid on time each year.

Homeowner's Insurance

Homeowner’s insurance is a form of property insurance that covers losses and damages to a home and its assets. It typically includes coverage against risks like fire, theft, and natural disasters.

Lenders usually require homeowners to carry insurance to protect the property, which serves as collateral for the loan.

PMI

Private Mortgage Insurance (PMI) is required if your down payment is less than 20% of the home’s value. It protects the lender in case the borrower defaults.

PMI increases your monthly payment but can usually be removed once you reach 20% equity in your home.

HOA Fees

HOA fees (Homeowners Association fees) are monthly or annual charges collected by the homeowner’s association to cover community expenses, such as maintenance of common areas, landscaping, and amenities like pools or gyms.

If you buy a home in a community governed by an HOA, these fees will be an additional cost to your monthly housing expenses.