Question 1

How is my monthly mortgage payment calculated?

Accepted Answer

Your monthly payment is calculated using the standard amortization formula: M = P[r(1+r)^n]/[(1+r)^n-1], where P is the principal loan amount, r is your monthly interest rate (annual rate divided by 12), and n is the total number of payments. This principal and interest (P&I) amount forms the base of your payment. If your down payment is less than 20%, Private Mortgage Insurance (PMI) is added. Property taxes and homeowners insurance are typically escrowed and divided by 12.

Question 2

How much house can I afford with my income?

Accepted Answer

Most lenders follow the 28/36 rule: your housing costs should not exceed 28% of your gross monthly income, and total debt payments should stay under 36%. Using this rule, a household earning $100,000/year ($8,333/month) could afford approximately $2,333/month in housing costs, which based on current rates could support roughly a $350,000–$400,000 home with 20% down.

Question 3

Should I choose a 15-year or 30-year mortgage term?

Accepted Answer

A 15-year mortgage offers significant interest savings — you pay substantially less total interest over the life of the loan. However, your monthly payment is higher (typically 20–25% more than a 30-year). A 30-year mortgage offers lower monthly payments and more flexibility but costs more in total interest. Choose based on your budget, how long you plan to stay in the home, and whether you can comfortably afford the higher 15-year payment.

Question 4

What is the difference between interest rate and APR?

Accepted Answer

Your interest rate is the cost of borrowing the principal amount, expressed as a percentage. APR (Annual Percentage Rate) includes the interest rate PLUS fees and closing costs, giving you a more complete picture of the true cost of the loan. When comparing lenders, always compare APRs — a lender with a lower advertised rate but high fees could have a higher APR than a lender with a slightly higher rate but low fees.

Question 5

How much should I put down on a house?

Accepted Answer

While 20% or more lets you avoid PMI (saving you 0.5%–1.5% of the loan amount annually), many buyers put down 3%–5% with conventional loans or 3.5% with FHA loans. A larger down payment means a smaller loan, lower monthly payments, and less interest paid over time. However, keeping some cash reserves for emergencies and closing costs is also important.

Question 6

What is PMI and when do I need it?

Accepted Answer

PMI (Private Mortgage Insurance) is required when your down payment is less than 20% of the home's value. It protects the lender if you default. PMI typically costs $30–$70 per month per $100,000 borrowed. Once you reach 20% equity in your home (either through payments or appreciation), you can request your lender to cancel PMI.

Mortgage Calculators — 12 Free Tools for Every Homebuyer

All Mortgage Calculators

Mortgage Payment

Home Affordability

FHA Loan

VA Loan

Mortgage Refinance

Refinance Break-Even

Amortization Schedule

Down Payment

Home Equity

HELOC Calculator

Closing Costs

Rent vs Buy

Side-by-Side Comparison Tools

15-Year vs 30-Year Mortgage

Should I Refinance?

Rent vs Buy

Find the Right Calculator for Your Goal

First-Time Homebuyer

Existing Homeowner

Frequently Asked Questions

Mortgage Calculators — 12 Free Tools for Every Homebuyer

All Mortgage Calculators

Mortgage Payment

Home Affordability

FHA Loan

VA Loan

Mortgage Refinance

Refinance Break-Even

Amortization Schedule

Down Payment

Home Equity

HELOC Calculator

Closing Costs

Rent vs Buy

Side-by-Side Comparison Tools

15-Year vs 30-Year Mortgage

Should I Refinance?

Rent vs Buy

Find the Right Calculator for Your Goal

First-Time Homebuyer

Existing Homeowner

Frequently Asked Questions