Mortgage loan amount calculators are invaluable tools for homebuyers, helping you estimate your monthly payment based on factors like down payment, interest rate and loan type. Not only that, but the calculator can also determine estimated payments if you’re refinancing an existing mortgage or looking to purchase a property in the future.
Purchasing a home is one of the biggest investments you’ll ever make, so it’s essential to have an accurate idea of your affordability before beginning search for your first property. While most people focus on purchase price, lenders also take into account how much you can borrow compared to the value of the property – this ratio is known as your loan-to-value ratio.
Mortgage loan amount calculators allow you to compare different loans, such as fixed-rate and adjustable-rate mortgages, so that you can determine which option best suits your financial situation and objectives.
The Calculator Explains PITI
A mortgage payment typically comprises four costs: principal, interest, property taxes and homeowners insurance (PMI). Lenders often refer to these fees collectively as PITI; however they can sometimes be combined into a single monthly expense.
Mortgage interest rates are the percentage of your total loan amount that your lender charges you to borrow money. The more competitively priced your interest rate is, the lower your monthly payments and loan term will be.
Our mortgage interest rate calculator allows you to enter a current interest rate and select your term length to view how these factors will impact your payments. Furthermore, you can adjust the amount of your monthly payments and see how that changes the amount due toward principal.
Your Down Payment
A down payment is the amount you contribute towards purchasing a home, usually between 20% and 30% of its purchase price. The larger your down payment, the less money you’ll need to borrow and pay in interest over the course of your mortgage.
If you don’t put down at least 20% of the home’s purchase price, private mortgage insurance (PMI) may apply. Usually, having at least 20 percent equity allows for this cost avoidance; however, it isn’t always possible.
Taxes
Every homeowner pays property taxes on their home. These funds support local services like schools, hospitals and roads. Your lender will collect these payments and hold them in an escrow account until they’re due.
Insurance
Homeowners insurance policies often cover fire, flood and theft risks. You’ll need to purchase your own policy if you don’t already have one; costs vary by location but it’s wise to secure at least several hundred dollars of coverage in case of disasters.
Debt-to-income ratio (DTI) is the amount of your pretax income that you spend monthly. Lenders use this number as their main consideration when deciding how much money to lend you; ideally, aim for a DTI ratio of 28% or lower since most lenders will decline issuing loans with higher DTIs.
