When considering purchasing a home, one of the first questions you may ask yourself is “How much can I afford?” Calculating your mortgage payment based on gross income is an effective way to determine what budget you can realistically afford. Simply multiply your gross monthly income by 0.25 to get an affordable monthly payment for you and your family.
Your mortgage payments will be determined by several factors, such as your home price, down payment amount, interest rate and loan type. Furthermore, credit score and income have an effect on how much money you can borrow.
If you’re uncertain how much your monthly mortgage payment will be, SmartAsset’s mortgage calculator can help. It takes into account factors like home price, down payment amount, interest rates and loan type to estimate how much you’ll pay each month.
Your Down Payment: The larger your down payment, the lower your mortgage payment will be. Typically, lenders require that you have a down payment of 20% or more; this helps avoid private mortgage insurance (PMI) and may qualify you for an improved interest rate as well.
You can enter a down payment into the calculator as either a percentage of your home price, or in dollars. By default, it will fill in the down payment field with 20%, unless otherwise specified.
Your monthly mortgage payments will include principal, interest, property taxes and homeowners insurance. Depending on local tax rates and other variables, the exact amount may change from year to year.
Before you apply for a mortgage, it’s essential to determine how much you can afford. A mortgage calculator can give you an accurate estimation of your monthly payments and loan term.
This mortgage calculator uses today’s average mortgage interest rate to estimate your monthly payments and total loan cost. Please be aware that it isn’t a loan approval calculator, so for more precise information please reach out to a Home Loan Specialist.
Mortgage Rates: When applying for a mortgage, the lender will require details about your income and debts. This can be an arduous process so it’s best to have an accurate overview of your finances before beginning this step.
Your monthly mortgage payment should not exceed 28% of pre-tax income and 36% of your total debt, also known as the debt-to-income (DTI) rule. This ratio helps lenders determine whether you possess the financial capacity to repay a mortgage.
Utilizing a mortgage calculator, you can compare the results of different loans to find what best fits your budget and objectives. You also gain insight into how many extra payments you could make to reduce your interest and get an accurate estimation of how much money you could save by paying off your mortgage early.
