Simple Mortgage Calculator with PMI and Taxes

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Buying a home is the largest purchase most people will make in their lifetime, so you should think carefully about how you’re going to finance it. Setting a budget upfront — long before you look at homes — can help you avoid falling in love with a home you can’t afford. That’s where a simple mortgage calculator like ours can help.

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How do I use the mortgage calculator?

Start by providing the home price, down payment amount, mortgage loan term, and interest rate. If you want the payment estimate to include taxes and insurance, you can input that information yourself.

Adding different information to the mortgage calculator will show you how your monthly payment changes. Feel free to try out different down payment amounts, loan terms, interest rates, and so on to see your options.

Simple Mortgage Calculator

Understanding Mortgages

What is a mortgage?

A mortgage is a loan from a bank or financial institution that helps you purchase a home.

When you get a mortgage, the lender pays for the cost of the home upfront. In exchange, you agree to pay the lender back with interest, over a set period of time.

Related Article: First-time Home buyer’s Mortgage Guide

What is a down payment?

A down payment is a money you pay at closing to decrease the total size of the loan. The down payment represents your stake in the home.

How much do I need to put down?

A down payment of 20% or more will get you the best interest rates and the most loan options. But you don’t have to put 20% down to buy a house. There are a variety of low-down payment options available for home buyers.

You may be able to buy a home with as little as 3% down, although there are some loan programs (such as VA loans and USDA loans) that require no money down.

Related Article: When to refinance mortgage

What’s a Mortage interest rate?

A mortgage interest rate is the percentage of your existing principal loan balance you pay your lender in exchange for borrowing the money to purchase a property.

It’s not the same as your annual percentage rate (APR) which takes other costs, including your mortgage interest rate, into consideration.

You’ll typically pay a higher mortgage interest rate if your credit is poor or if you have other negative financial issues.

You can lower your mortgage interest rate by buying “discount points,” but this means more money upfront and might not make sense if you’re not planning to stay in the home for a while. 

Current National Average Mortgage Rates

What determines my interest rate?

There are several factors that determine your interest rate, including your loan type, loan amount, down payment amount, and credit history. Interest rates are also determined by market trends.

What is a loan term?

The term is the length of time you spend paying off the loan. The most popular loan term is the 30-year term. The terms available to you will depend on your financial situation and the type of loan you choose.

Should I choose a long or short loan term?

It depends on your budget and goals. A shorter-term will allow you to pay off the loan quicker, pay less interest and build equity faster, but you’ll have a higher monthly payment.

A longer-term will have a lower monthly payment because you’ll pay off the loan over a longer period of time. However, you’ll pay more in interest.

Managing Your Mortgage Payment

What’s included in my mortgage payment?

A typical monthly mortgage payment has four parts: principal, interest, taxes, and insurance. These are commonly referred to as PITI.

The mortgage payment estimate you’ll get from this calculator includes principal and interest. If you choose, we’ll also show you estimated property taxes and homeowners insurance costs as part of your monthly payment.

Related Article: 15 Quick Ways To Lower Homeowners Insurance Costs

This calculator doesn’t include mortgage insurance or guarantee fees. Those could be part of your monthly mortgage payment depending on your financial situation and the type of loan you choose.

What is principal?

This is the amount you borrow from your lender to buy your home. It’s factored into your monthly payment and paid off throughout the life of your loan.

What taxes are part of my monthly mortgage payment?

The “taxes” portion of your mortgage payment refers to your property taxes. The amount you pay in property taxes is based on a percentage of your property value, which can change from year to year.

The actual amount you pay depends on several factors including the assessed value of your home and local tax rates.

What’s a homeowners insurance premium?

A homeowners insurance premium is the cost you pay to carry homeowners insurance – a policy that protects your home, personal belongings, and finances. The homeowner’s insurance premium is the yearly amount you pay for the insurance. Many home buyers pay for this as part of their monthly mortgage payment.

Related Article: Homeowners Insurance: Everything you need to know

Next steps

A mortgage calculator is a springboard to helping you estimate your monthly mortgage payment and understand what it includes. Your next step after playing with the numbers: get preapproved by a mortgage lender.

Applying for a mortgage will give you a more definitive idea of how much house you can afford after a lender has vetted your employment, income, credit, and finances. You’ll also have a clearer idea of how much money you’ll need to bring to the closing table.

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