Mortgage Calculator
Calculate your monthly mortgage payments and see how much interest you'll pay over the life of your loan.
Understanding Mortgages
A mortgage is a loan used to purchase a home. Understanding how mortgages work is crucial for making informed decisions about homeownership.
Types of Mortgages
- Fixed-Rate Mortgage: Interest rate remains the same throughout the loan term, providing predictable monthly payments.
- Adjustable-Rate Mortgage (ARM): Interest rate adjusts periodically based on market conditions, potentially offering lower initial rates.
- FHA Loans: Government-backed loans with lower down payment requirements, ideal for first-time homebuyers.
- VA Loans: Available to veterans and active military members, often requiring no down payment.
- USDA Loans: Designed for rural homebuyers with low to moderate incomes, offering zero down payment options.
Key Mortgage Terms
- Principal: The amount borrowed to purchase the home.
- Interest: The cost of borrowing money, expressed as a percentage of the principal.
- Down Payment: The initial payment made toward the home purchase, typically 5-20% of the home price.
- Private Mortgage Insurance (PMI): Required when down payment is less than 20%, protecting the lender against default.
- Escrow: An account where a portion of your monthly payment is held to cover property taxes and insurance.
- Amortization: The process of paying off a debt over time through regular payments.
Factors Affecting Mortgage Payments
- Loan Amount: Higher loan amounts result in higher monthly payments.
- Interest Rate: Lower rates mean lower monthly payments and less interest paid over time.
- Loan Term: Longer terms (e.g., 30 years) result in lower monthly payments but more interest paid overall.
- Down Payment: Larger down payments reduce the loan amount and may eliminate PMI.
- Property Taxes and Insurance: These costs are often included in monthly payments and vary by location.
- Credit Score: Better credit scores typically qualify for lower interest rates.