with Amortization Schedule and Chart Presentation to calculate your monthly mortgage payments
The Mortgage Calculator help you to estimate the monthly payment due along with other financial costs associated with mortgage loans. There are options in our mortgage calculator to include extra payments or annual percentage increases of common mortgage-related expenses. The mortgage calculator is mainly intended for use by U.S. residents.
Your monthly mortgage payment will depend on your home price, down payment, loan term, property taxes, homeowners insurance, and interest rate on the loan (which is highly dependent on your credit score). Use the inputs below to get a sense of what your monthly mortgage payment could end up being.
What is a Mortgage Loan Amortization Schedule?
Though the monthly loan payments remain largely uniform throughout the tenure of their loan, the amounts repaid are credited towards the principal and interest to be repaid. Typically the initial instalments contribute more towards the interest amount with later instalments going towards the principal.
An amortization schedule provides the break-up of these amounts repaid towards principal and interest along with their respective balances through every year of the loan.
Simply put, an amortization schedule is the road map towards the repayment of your home loan denoting the milestones and the ideal points you should be at through the cycle.
Once you calculate the Mortgage Payments, click on the “Payment Schedule” button given on the mortgage calculator to get your amortization schedule. You can also print the same.
How do calculate your mortgage payments using our Mortgage Calculator?
The calculations behind mortgage payments are complicated, but our Mortgage Calculator makes this math problem quick and easy.
- First, enter the home/ property purchase price (if you’re buying) or the current value of your home (if you’re refinancing) in the “Purchase Price” Section.
- In the “Down Payment” section, enter the % of your down payment (if you’re buying) or the amount of equity you have (if you’re refinancing). A down payment is the cash you pay upfront for a home, and home equity is the value of the home, minus what you owe.
- Next, you can see the “Term in Years” section, where you need to enter the mortgage loan repayment term in years. The repayment term is usually 30 years, but maybe 20, 15 or 10 and our calculator adjusts the repayment schedule.
- In the “Interest rate” box, enter the rate you expect to pay. Your rate will vary depending on whether you’re buying or refinancing.
- You can also enter the following to get your mortgage figures. You can ignore these figures as these costs might be rolled into your escrow payment, but they don’t affect your principal and interest as you explore your options.
Property Tax (yearly)
The amount in this box is based on the median property tax amount paid in your state. Enter the annual property tax amount here in the mortgage calculator.
Home Insurance/ Property Insurance (yearly)
The amount in this box is based on the average annual homeowner’s insurance premium for your state. Enter the annual insurance premium in the mortgage calculator.
Private Mortgage Insurance (PMI) (monthly)
PMI is required to pay when your downpayment is less than 20%. Enter the monthly PMI premium here.
Once you calculate the figures, you will get the monthly loan payments (principal and interest ) and total monthly payments (including monthly loan payments, property tax, property insurance and PMI).
How are monthly Mortgage Payments Calculated?
The formula used to calculate the monthly mortgage payments is –
M=P x R x (1+R)^N / [(1+R)^N-1] where-
M= Monthly Mortgage Payments
P = Principal loan amount
N = Loan tenure in months
R = Monthly interest rate
The rate of interest (R) on your loan is calculated per month.
R = Annual Rate of interest/12/100
If rate of interest is 7% p.a. then r = 7/12/100 = 0.0058
For example, If a person avails a loan of $300,000 at an annual interest rate of 7% for a tenure of 120 months (10 years), then his monthly loan payments will be calculated as under:
Monthly Mortgage Payment= $300,000 * 0.0058 * (1 + 0.0058)120 / ((1 + 0.0058)120 – 1) = $3,483
The total amount payable will be $3,483 * 120 = $417,960. The principal loan amount is $300,000 and the Interest amount will be $117,960
Mortgage Fees and Costs
If this is your first time shopping for a mortgage, the terminology can be intimidating. It also can be difficult to understand what you’re paying for—and why.
Here’s what to look for when reviewing your mortgage costs and fees:
The principal is the amount of money you borrowed on the mortgage. A portion of each payment will go toward paying this off, so the number will go down as you make monthly payments.
This is essentially what the lender is charging you to borrow the money. Your interest rate is expressed as a percentage and may be fixed or variable.
Property taxes are imposed by your local tax authority. This number can usually be viewed on your recorder or assessor’s website—wherever you access property cards and other real estate records.
Homeowners insurance is required to protect you and your lender in the case of damage to your home. If you’re considering a home, ask the real estate agent if they have any information about current insurance costs. Otherwise, contact your local insurance agent to get a quote.
Also known as private mortgage insurance—or PMI—this protects the lender in case you default on your mortgage. It typically ranges from 0.58% to 1.86% of your total mortgage amount and you will need to factor this in if your down payment is less than 20%.
How to lower your monthly mortgage payment?
You can calculate the exact mortgage payments using our mortgage calculator. If you find your mortgage commitments a burden, you can try some tactics to reduce the hit. Play with a few of these variables:
- Choose a longer loan. If your monthly mortgage payments are higher, you can try for a longer-term loan. Here your payment will be lower but you’ll pay more interest over the life of the loan.
- Spend less on the home. Try to reduce your overall mortgage budget. Borrowing less translates to a smaller monthly mortgage payment. It also reduces your overall interest flow.
- Avoid PMI. A down payment of 20% or more (or in the case of a refi, equity of 20% or more) gets you off the hook for private mortgage insurance (PMI).
- Shop for a lower interest rate. Be aware, though, that some super-low rates require you to pay points, an upfront cost.
- Make a bigger down payment. This is another way to reduce the size of the loan.
History of Mortgages in the US
Mortgage lending in the US has evolved considerably over the years. We’ve seen the industry shift from offering primarily cookie-cutter products to more specialized loans that are tailored to a borrower. This is a major reason why so many borrowers are able to buy a home sooner in their lifetime.
When was the mortgage invented?
The concept of a home mortgage was foreign to the majority of Americans before the 1930s. At the time, a mere 40% of families owned their homes. Those who didn’t have the funds to buy a house outright were pretty much out of luck.
Mortgages finally entered the U.S. housing market in the early 1930s. Insurance companies, not financial institutions, implemented the idea as a way to take advantage of borrowers during the Great Depression. If a borrower failed to keep up with their payments, they would gain ownership of the property.
Loans that were difficult to obtain
Loans that were available during this time were anything but favourable for borrowers. According to this resource from HowStuffWorks, loan terms were limited to 50% of the home’s market value. Borrowers had only three to five years to pay off their loan, while also accounting for a balloon payment at the end of their term.
Very few Americans could purchase a home due to such unrealistic loan requirements. Families settled on the notion of renting for the foreseeable future, even if it meant never having a place of their own. Thankfully, this wouldn’t be the case much longer.
More affordable homeownership
President Franklin D. Roosevelt took charge of the real estate market after the foreclosure of hundreds of thousands of homes. It all started with the buying of 1 million defaulted mortgages and changing them to fixed-rate, long-term loans. Borrowers had the option of paying back a 15-year mortgage, or eventually, a 30-year mortgage.
We also saw the advent of mortgage insurance as part of the New Deal. The combination of this and extended loan terms encouraged more Americans to pursue their homeownership goals. FDIC-insured deposits made funding these “modern” mortgages easier for banks.
The U.S. homeownership rate skyrocketed from 44% to 62% between 1940 and 1960. Americans were not only financially capable of buying a home, but the industry had the support of the newly formed Federal Housing Administration (FHA) and Veterans Administration (VA). New legislation in the 1960s and 1970s ensured that all borrowers, regardless of race, could purchase a home in a desirable location.
The housing crisis of 2008
Fast forward to the 2000s when the mortgage lending industry expanded — and not in a good way. With minimal government regulations in place, borrowers quickly became the victims of predatory lending practices. Rather than refinancing to access equity, homeowners found themselves in an uphill battle trying to stay current on an overly complex, risky loan.
The Center for American Progress mentions that the spread of these subprime loans simply inundated the global financial system. In a domino effect, the previously thriving economy took a complete nosedive. Countless borrowers ended up “underwater” or “upside-down” on their loans because of the 2008 housing crash.
2020- Till Aug 2022
The COVID-19 pandemic has had an ongoing effect on the U.S. housing market and the mortgage industry alike. When Americans were forced to stay home to stay safe, the economy came to a standstill in 2020, leading to Federal Reserve and mortgage rates dropping in an effort to encourage spending.
This led to a dramatic increase in the home loan and refinance applications, pushing more buyers into the market and quickly diminishing the available housing inventory. Increased demand and a shortage of housing created significant increases in home values and an extremely competitive seller’s market, making it challenging for prospective buyers to find and buy a house that suits their needs.
Though mortgage rates began to increase again in 2021, the housing market continues to be competitive today, with mortgage rates on the rise.