Mortgage Calculator Guide: Plan Your Home Purchase
Buying a home is one of the biggest financial decisions you'll ever make. Our Mortgage Calculator helps you look beyond the sticker price to understand the true monthly cost of homeownership, including taxes, insurance, and interest.
What is PITI?
Most lenders use PITI to determine if you qualify. It stands for:
Principal (loan balance)
Interest (cost of borrowing)
Taxes (property tax)
Insurance (homeowners insurance)
Amortization Explained
Amortization is the process of paying off debt with regular payments. In the early years, most of your payment goes toward **interest**. Over time, more of it goes toward paying down the **principal** (the house itself).
Key Metrics in This Calculator
Monthly Payment
The total amount you pay each month. We include property tax and insurance estimates so you don't get surprised by hidden costs.
Total Interest Paid
This is the "cost" of the loan. A higher interest rate or longer loan term (e.g., 30 years vs 15 years) significantly increases this number.
Loan-to-Value (LTV)
The percentage of the home's price you are borrowing. If you put 20% down, your LTV is 80%. Lenders prefer lower LTV ratios.
Strategic Mortgage Repayment Tips
The Power of One Extra Payment
Did you know? Making just one extra mortgage payment per year can shorten your 30-year loan by roughly 4-5 years and save you tens of thousands of dollars in interest. This works because 100% of that extra payment goes directly to reducing your principal.
How to Lower Your Mortgage Payment
- Increase Down Payment: Putting more money down reduces the principal and lowers your monthly obligation.
- Improve Credit Score: A better credit score often qualifies you for lower interest rates, which can save you thousands over the life of the loan.
- Consider a 15-Year Term: While monthly payments are higher, you pay significantly less interest and own your home faster.
- Shop for Insurance: Homeowners insurance rates vary wildly. Comparing quotes can save $50-$100/month.
Frequently Asked Questions
Do I need to pay PMI?▼
Private Mortgage Insurance (PMI) is usually required if your down payment is less than 20%. It protects the lender, not you. Once you build 20% equity, you can often request to have it removed.
Fixed vs. Adjustable Rate?▼
Fixed-rate mortgages lock in your interest rate for the entire term (stability). Adjustable-rate mortgages (ARMs) may start lower but can increase over time (riskier).
