How to Use Our Mortgage Calculator

A mortgage calculator is an essential tool for anyone considering buying a home. It helps you estimate your monthly payments, understand how much house you can afford, and compare different loan scenarios before committing to one of the largest financial decisions of your life.

Our mortgage calculator goes beyond basic payment calculations. It offers four distinct modes, each designed to answer different questions you might have during your home buying journey. Whether you're just starting to explore options or comparing specific properties, our calculator provides the insights you need.

What makes a good mortgage calculator? Accuracy, comprehensiveness, and ease of use. Our calculator includes all the costs that make up your total monthly payment: principal, interest, property taxes, homeowners insurance, HOA fees, and PMI (when applicable). This gives you a realistic picture of what homeownership will actually cost.

Our calculator features four specialized modes, each optimized for different scenarios:

Best for: When you've found a home you like and want to know the monthly payment, or when you're browsing listings and want to quickly calculate payments for different properties.

Step-by-Step Instructions:

1. 1
   Enter the Home Price: Input the purchase price of the property. You can use the slider for quick adjustments or click the number to type an exact amount. Typical home prices range from $200,000 to $800,000+ depending on your market.
2. 2
   Set Your Down Payment: Adjust the down payment percentage. While 20% is ideal (eliminates PMI), many buyers put down 3-10%. The calculator automatically shows your down payment amount in dollars. Remember: a larger down payment means lower monthly payments and less interest over time.
3. 3
   Input Interest Rate: Enter your expected mortgage interest rate. As of January 2026, rates typically range from 6-8% for conventional loans. Contact lenders for current rates specific to your credit profile. Even a 0.5% difference can significantly impact your payment.
4. 4
   Choose Loan Term: Select 30 years (lower monthly payment) or 15 years (higher payment but much less total interest). You can also enter custom terms like 20 or 25 years. Most buyers choose 30 years for flexibility.
5. 5
   Add Property Costs: Include annual property tax (typically 0.5-2% of home value, varying by location), annual home insurance ($1,000-$3,000 depending on coverage and location), and monthly HOA fees if applicable. These vary significantly by area - research local rates.
6. 6
   Review Your Results: The calculator displays your total monthly payment with a detailed breakdown. Scroll down to see payment breakdown charts, amortization schedule showing how much goes to principal vs. interest each month, and total costs over the loan lifetime.

Best for: When you know your monthly housing budget and want to determine what price range you should be shopping in. This is often the best starting point for first-time buyers.

How to Use:

This calculator works in reverse from the price-to-payment mode. Instead of starting with a home price, you start with what you can comfortably afford to pay each month. The calculator then determines what home price fits that budget.

1. Set your monthly budget: Be realistic. Consider your current rent or housing costs. Most experts recommend keeping housing costs to 28% of gross income or less.
2. Enter your down payment amount: This directly impacts the home price you can afford. More down payment = higher affordable price.
3. Input expected interest rate and loan term: Same as the price-to-payment calculator.
4. Add estimated property costs: The calculator deducts these from your monthly budget to determine how much is available for principal and interest.
5. View your affordable price range: The calculator shows the maximum home price within your budget, your loan amount, and complete payment details.

This mode helps you set realistic expectations and focus your home search on properties you can actually afford, saving time and emotional energy.

Best for: Getting a holistic view of affordability based on your complete financial picture, including income and existing debts. This is the most comprehensive affordability assessment.

Understanding DTI Ratios:

This calculator uses the industry-standard 28/36 rule: your housing costs should not exceed 28% of your gross monthly income (front-end ratio), and your total debt payments should not exceed 36% of gross income (back-end ratio). These are the same ratios lenders use to qualify borrowers.

Required Inputs:

• Annual Income: Include all sources - salary, bonuses, commissions, rental income, etc. Use gross income (before taxes).
• Monthly Debts: Sum all minimum payments on credit cards, car loans, student loans, personal loans, and other recurring debt. Do not include utilities or living expenses.
• Down Payment Saved: How much cash you have available for a down payment.
• Interest Rate and Loan Term: Your expected mortgage terms.
• Property Tax and Insurance Rates: As percentages of home value (defaults provided based on national averages).

Understanding Results:

The calculator provides two key numbers: your comfortable price range (using the 28% front-end ratio) and your maximum price range (using the 36% back-end ratio). The comfortable range is more conservative and recommended, leaving room for savings, emergencies, and lifestyle expenses. The maximum range shows what lenders might approve you for, but stretching to this limit can leave you financially stressed.

Best for: Comparing different properties, loan terms, or down payment scenarios side-by-side to make informed decisions.

The comparison tool allows you to create up to three scenarios and view them simultaneously. This is invaluable when you're trying to decide between:

• Different properties at various price points
• 15-year vs. 30-year mortgages
• Different down payment amounts (e.g., 10% vs. 20%)
• Fixed-rate vs. adjustable-rate mortgages
• Conventional loans vs. FHA or VA loans

Each scenario is fully independent - adjust any parameter without affecting the others. The tool displays visual charts comparing monthly payments and total costs, making differences immediately apparent.

• Use realistic interest rates: Check current market rates from multiple lenders. Your actual rate depends on credit score, down payment, and loan type.
• Research local property taxes: These vary dramatically by location. Check your county's tax assessor website for accurate rates.
• Get insurance quotes: Contact insurance agents for realistic homeowners insurance estimates based on the specific property.
• Factor in PMI correctly: If you're putting down less than 20%, include PMI in your calculations (typically 0.3-1.5% of loan amount annually).
• Consider all HOA costs: Some communities have monthly fees plus special assessments. Get the complete picture from the HOA.
• Account for closing costs: While not part of monthly payments, you'll need 2-5% of the purchase price for closing costs.
• Include maintenance reserves: Budget 1% of home value annually for maintenance and repairs.

Once you've used the calculator to understand your budget and explore scenarios, here's what to do next:

1. Check and improve your credit score: Get free reports from AnnualCreditReport.com. Scores above 740 get the best rates.
2. Save for down payment and closing costs: Aim for at least 3-20% down plus 2-5% for closing costs.
3. Get pre-approved (not just pre-qualified): Shop with at least 3 lenders within a 14-day period to compare rates without hurting your credit.
4. Work with a real estate agent: Buyer's agents are typically free (paid by seller) and provide invaluable local expertise.
5. Start house hunting: Use your calculated affordable range to filter listings. Don't fall in love with homes outside your budget.
6. Review the calculator regularly: As rates change or your financial situation evolves, recalculate to stay informed.