How to Calculate a House Payment
Calculate the mortgage amount., Determine the interest rate on your mortgage., Choose a mortgage term that meets your financial needs., Calculate the monthly principal and interest payment using a financial calculator, a spreadsheet program such as...
Step-by-Step Guide
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Step 1: Calculate the mortgage amount.
Subtract your down payment from the purchase price of the house.
Add to this any closing costs you plan to finance (or roll into the mortgage).
Conventional mortgages typically require a 20 percent down payment.
Your down payment on a Federal Housing Authority (FHA) mortgage can be as low as
3.5 percent of the purchase price.
The FHA also allows you to include many closing costs in the amount financed.
The down payment on a Veteran's Administration (VA) loan can be as low as 0 percent.
Private mortgages are often available with down payments of less than 20 percent of the mortgage amount, but they require you to purchase private mortgage insurance. -
Step 2: Determine the interest rate on your mortgage.
Interest rates vary based on several factors.
Some lenders will provide a lower interest rate in exchange for charging "points," which are prepaid interest fees you pay to the lender at closing.
Lenders will typically charge lower interest rates on adjustable rate mortgages (ARMs) than on fixed rate mortgages.
The interest rate on an ARM will be adjusted at predefined intervals, often each year, every 3 years or every 5 years.
With most ARMs, your monthly payment will change when you interest rate adjusts. , The most common mortgage term is 30 years, but mortgage loans can be written for longer or shorter periods. , When using a financial calculator or spreadsheet program, you will need to convert the annual interest rate into a monthly interest rate by dividing the rate by
12.
You will also need to state the length of the mortgage in months (360 months for a 30-year mortgage).
Many mortgage calculators are available online.
These tools calculate your monthly principal and interest payment once you input a loan amount, annual interest rate and loan term in years. , Identify all of the taxes that are levied on the property.
Often property taxes are levied by multiple jurisdictions, such as village, town, city, county, school district, fire district, water district or sewer district.
Make sure you have accurate figures for tax bills from each taxing jurisdiction.
Determine whether the current tax bills include any credits you will not qualify for.
You should add these credits to the tax amounts currently paid to better estimate the total property taxes you will have to pay. , This is your monthly tax payment. , Once you have selected an insurance carrier, divide the annual premium by
12.
This is your monthly homeowners' insurance payment. , Typically, if your down payment is less than 80 percent of the mortgage amount, the lender will require that you purchase PMI, which protects the lender from loss if you default on the mortgage.
When you purchase PMI, you usually will pay a fee at closing and also pay a monthly fee, which is included in your house payment. , Condominiums, co-ops, some townhouses and houses in homeowner's associations are subject to additional fees.
Make sure you identify the amount of all association fees and maintenance fees. , The total is your monthly housing payment. -
Step 3: Choose a mortgage term that meets your financial needs.
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Step 4: Calculate the monthly principal and interest payment using a financial calculator
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Step 5: a spreadsheet program such as Excel or Open Office Calc
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Step 6: or an online mortgage calculator.
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Step 7: Determine the monthly amount you will pay into escrow each for payment of your property taxes.
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Step 8: Add all of the annual property tax amounts and divide by 12.
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Step 9: Contact several insurance companies and obtain quotes for homeowners' insurance.
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Step 10: Ask you lender if private mortgage insurance (PMI) will be required on your mortgage loan and how much the monthly premium will be.
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Step 11: Determine the amount of any additional monthly fees.
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Step 12: Add the principal and interest payment
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Step 13: monthly tax payment
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Step 14: monthly insurance payment and monthly payment for any additional association fees.
Detailed Guide
Subtract your down payment from the purchase price of the house.
Add to this any closing costs you plan to finance (or roll into the mortgage).
Conventional mortgages typically require a 20 percent down payment.
Your down payment on a Federal Housing Authority (FHA) mortgage can be as low as
3.5 percent of the purchase price.
The FHA also allows you to include many closing costs in the amount financed.
The down payment on a Veteran's Administration (VA) loan can be as low as 0 percent.
Private mortgages are often available with down payments of less than 20 percent of the mortgage amount, but they require you to purchase private mortgage insurance.
Interest rates vary based on several factors.
Some lenders will provide a lower interest rate in exchange for charging "points," which are prepaid interest fees you pay to the lender at closing.
Lenders will typically charge lower interest rates on adjustable rate mortgages (ARMs) than on fixed rate mortgages.
The interest rate on an ARM will be adjusted at predefined intervals, often each year, every 3 years or every 5 years.
With most ARMs, your monthly payment will change when you interest rate adjusts. , The most common mortgage term is 30 years, but mortgage loans can be written for longer or shorter periods. , When using a financial calculator or spreadsheet program, you will need to convert the annual interest rate into a monthly interest rate by dividing the rate by
12.
You will also need to state the length of the mortgage in months (360 months for a 30-year mortgage).
Many mortgage calculators are available online.
These tools calculate your monthly principal and interest payment once you input a loan amount, annual interest rate and loan term in years. , Identify all of the taxes that are levied on the property.
Often property taxes are levied by multiple jurisdictions, such as village, town, city, county, school district, fire district, water district or sewer district.
Make sure you have accurate figures for tax bills from each taxing jurisdiction.
Determine whether the current tax bills include any credits you will not qualify for.
You should add these credits to the tax amounts currently paid to better estimate the total property taxes you will have to pay. , This is your monthly tax payment. , Once you have selected an insurance carrier, divide the annual premium by
12.
This is your monthly homeowners' insurance payment. , Typically, if your down payment is less than 80 percent of the mortgage amount, the lender will require that you purchase PMI, which protects the lender from loss if you default on the mortgage.
When you purchase PMI, you usually will pay a fee at closing and also pay a monthly fee, which is included in your house payment. , Condominiums, co-ops, some townhouses and houses in homeowner's associations are subject to additional fees.
Make sure you identify the amount of all association fees and maintenance fees. , The total is your monthly housing payment.
About the Author
Robert Coleman
Experienced content creator specializing in cooking guides and tutorials.
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