Frequently Asked Questions
Common questions about mortgage calculations, answered simply.
How is my monthly mortgage payment calculated?
Your total monthly payment has up to 5 parts: Principal & Interest (the loan itself), Property Tax (paid to your local government), Home Insurance (hazard insurance), PMI (if your down payment is under 20%), and HOA fees (if applicable). Most online calculators only show principal & interest — ours shows the true total.
What is PMI and when do I pay it?
PMI (Private Mortgage Insurance) is required by most lenders when your down payment is less than 20%. It protects the lender, not you, in case you default on the loan. PMI rates typically range from 0.25% to 1.00% of the loan amount per year, depending on your down payment size. PMI is automatically removed once you reach 20% equity in most cases (22% for FHA loans).
How much can I save by making extra payments?
Even a small extra payment makes a big difference over 30 years. Paying an extra $100/month on a $320,000 loan at 6.5% saves about $47,000 in interest and pays off the loan 4 years earlier. Use our Extra Payment tab to calculate your exact savings based on your loan.
15-year vs 30-year: which is better?
A 30-year mortgage has lower monthly payments but much higher total interest. A 15-year mortgage has higher monthly payments but can save you hundreds of thousands in interest. Use our comparison tab to see the exact numbers for your loan amount and rate. If you can afford the higher payment, 15-year saves dramatically.
How much house can I afford?
Lenders typically use the 28/36 rule: your housing costs should not exceed 28% of your gross monthly income, and your total monthly debt payments should not exceed 36%. This includes the mortgage (PI + tax + insurance + PMI), plus credit cards, student loans, car payments, etc. Use our "How Much Can I Afford?" tab to get your personalized maximum home price.
What credit score do I need to buy a house?
For a conventional mortgage, most lenders want a score of at least 620. For the best rates, aim for 740+. FHA loans can go as low as 500 with a 10% down payment, or 580 with 3.5% down. Your rate (and thus your monthly payment) depends heavily on your credit score.
Are property tax rates the same everywhere?
No — property tax rates vary dramatically by state and even by county. Hawaii has the lowest effective rate (around 0.28%), while New Jersey has the highest (around 2.49%). Use our state selector to auto-fill your state's typical rate, or enter a custom rate if you know your local rate.
Is this calculator accurate enough for real planning?
Our calculations use standard US mortgage formulas and are accurate for estimation purposes. However, your actual payment may vary based on your credit score, loan type (conventional, FHA, VA, USDA), lender fees, and local tax/insurance rates. Always get a formal loan estimate from a lender before making an offer on a home.