Mortgage Calculator With Interest

If you need to finance the purchase of a home with a mortgage, the sticker price of the home is not what you’ll end up paying. Banks charge interest on the money they lend, so when determining whether you can afford to buy a home, it’s critical to take this factor into account. A mortgage calculator with interest will help you figure out the true cost of a mortgage.

What Is a Mortgage Calculator with Interest?

A mortgage calculator with interest allows you to input the amount you’re borrowing, the term of the loan, and its interest rate. You can then see how much your monthly mortgage loan payment will be, what the total cost of the mortgage will be, and how much of the total cost is interest.

For the math curious out there, here’s a peek at the formula, with p being principal, the initial amount you are borrowing, and i being interest rate per repayment period. N is the number of payments over the life of the loan:

Monthly payment = p [ i (1+i) ^ n ] / [ (1+i) ^ n – 1 ]

While it is certainly possible to compute a mortgage payment by hand, a calculator does the work for you. It also allows you to easily tinker with the variables to see how changes to principal or interest rate, for instance, affect your monthly payment. Using a calculator will help ensure that your results are accurate, giving you a clear sense of what you might pay.

Recommended: 15-Year vs 30-Year Mortgage: Which Should You Choose?

Why Calculate Mortgage Payments with Interest?

By design, a mortgage includes interest payments. When a lender makes a loan, it takes on a certain amount of risk that the borrower may not pay the money back in full. Charging interest is one way lenders are compensated for that risk.

Charging interest is also one of the ways that banks make a profit. And it’s how they can afford to pay interest to customers who hold interest-bearing accounts, such as savings accounts.

Because lenders charge interest, when you borrow to buy a home, you’ll ultimately end up paying more than the sticker price. That’s why it’s critical to include interest in your calculation as you determine how much house you can afford and what monthly payments are possible for you to make.

Pros and Cons of Using a Mortgage Calculator With Interest

As noted above, there are a number of advantages to using a mortgage calculator with interest. The calculator does the math for you, ensuring accurate results. It allows you to easily tinker with the variables, which can help you determine how much you can afford to borrow and how large your monthly payment will be in different scenarios (a 15-year vs. a 30-year mortgage, for example). And it helps you understand the true cost of buying a home.

That said, there can be some limitations in using a mortgage calculator. For example, calculators may assume a fixed interest rate, which can lead to inaccurate results if you’re considering an adjustable-rate mortgage. Mortgage calculators may not capture all of the costs associated with a mortgage, such as private mortgage insurance (PMI), or homebuying closing costs. Not all mortgage calculators show taxes, which some buyers have rolled in to their monthly mortgage payment.

How Does a Down Payment Work?

When you take out a loan to buy a home, your lender will often require that you make a down payment equal to a percentage of the home purchase price. How much is a down payment? Some lenders require a down payment of as much as 20%, and putting that much down can often help a borrower qualify for a mortgage at a better interest rate than they would get with a lower down payment. But ultimately, the size of your down payment will depend on your lender and the type of loan you choose. The bigger your down payment, the smaller the principal amount of your mortgage loan will be.

The down payment serves a couple functions. First, it proves to the seller that a buyer is serious about purchasing the property. It also reduces the amount of money that the borrower needs to borrow, which reduces the lender’s risk.

This idea of risk reduction is key. The less risk a lender takes on, the more leeway it may have to reduce the amount of interest it charges. This, in turn, lowers the cost of the loan and increases the chances a borrower will get a good mortgage rate. As a result, it may be wise to put down as much money as you can afford upfront to save money later. A home loan help center can help you learn more about down payments and other basics of buying a home.

Moreover, did you know mortgage rates vary by state?

Current Mortgage Rates by State

Alabama

Alaska

Arizona

Arkansas

California

Colorado

Connecticut

Delaware

Florida

Georgia

Hawaii

Idaho

Illinois

Indiana

Iowa

Kansas

Kentucky

Louisiana

Maine

Maryland

Massachusetts

Michigan

Minnesota

Mississippi

Missouri

Montana

Nebraska

Nevada

New Hampshire

New Jersey

New Mexico

New York

North Carolina

North Dakota

Ohio

Oklahoma

Oregon

Pennsylvania

Rhode Island

South Carolina

South Dakota

Tennessee

Texas

Utah

Vermont

Virginia

Washington

West Virginia

Wisconsin

Wyoming

How to Lower a Mortgage Down Payment

Putting down a large amount of money upfront may not always be possible. Borrowers have a couple courses of action to help them make lower down payments. Those making a down payment of less than 20% and who are borrowing using a conventional loan are typically required to pay for PMI until they build 20% equity in their home.

Some types of loans, such as Federal Housing Administration loans, may allow borrowers to put as little as 3.5% down, but these loans may require that borrowers pay both an upfront and a monthly mortgage insurance premium (MIP); the monthly MIP is often around .55%. Fortunately, the MIP is reduced as the loan is paid off.

Average Mortgage Down Payment in 2023

Housing prices fell in the first half of 2023 since their peak at the end of 2022, so down payments have fallen year-over year. The average median down payment in the second quarter of 2023 was $34,248, down 3.3% vs. the same time in 2022. Borrowers paid an average of 14.7% down in the third quarter of 2023, and median down payment amounts were about $30,000.

Down payments on second homes and investment properties tend to be higher at roughly 28%, about twice as much as a down payment on a primary residence. Wondering how much home you can afford based on your income, down and other variables? A home affordability calculator will do the math for you.

Recommended: Jumbo Mortgage Loans

Tips on Mortgage Down Payments

As you’re saving for a down payment on a home, consider the following tips.

First, remember that the larger your down payment, the lower your loan principal will be, which reduces the amount you pay in interest over the life of the loan. As a result, consider making as large a down payment as possible, while still reserving funds for closing costs and moving expenses.

Look into first-time homebuyer programs and loans. These may include different types of mortgages that require smaller down payments.

Consider setting aside a dedicated savings account for your down payment so you won’t be tempted to dip into your savings for other purposes. You may even consider automated deposits into the account to help keep you on track to meet your goals.

The Takeaway

As you shop for a new home, a mortgage calculator with interest is an important tool to help you understand what you can afford, both in terms of housing options and monthly mortgage payments. The size of your down payment also plays a critical role. The more you put down, the more you reduce the size of your principal, which in turn reduces the amount you pay in interest over time.

Armed with information about principal size and interest — and with a little help from a mortgage calculator — you can better determine what the true cost of financing a home will be.

FAQ

How do I calculate how much interest I will pay on my mortgage?

A mortgage calculator with interest will show you how much the total cost of a mortgage will be, and how much of that cost comes from interest. It will also allow you to play with variables to see how changing, say, the term of the loan will impact payments and interest costs.

How much interest do you pay on a $500,000 house over 30 years?

The amount of interest you’ll pay will depend on your interest rate. For example, if you put down a 20% down payment and borrowed $400,000 with a 30-year mortgage at a fixed interest rate of 4.03% will cost you $689,971. In the end, you’ll have paid $289,971 in interest.

How much home can I afford with a $100,000 salary?

There’s a common rule of thumb that you shouldn’t pay more than 28% of your gross income (income before taxes) on housing. Using this rule, with a $100,000 salary, you’d have $28,000 a year to spend on a mortgage. With a 30-year loan at a 4.03% fixed interest rate, you could potentially afford a $500,000 house, provided you also had around $50,000 saved for a down payment. Use a home affordability calculator can help you determine how much house you can afford based on your specific circumstances.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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Mortgage Calculator With Taxes and Insurance

A mortgage calculator with taxes and insurance is an invaluable tool when you’re on your homebuying journey. It will help you determine the monthly cost of owning a house, factoring in not only mortgage payments but also taxes and insurance. As with any financial tool, the more information you have, the more accurate the results. Let’s look at what a mortgage calculator with insurance and taxes is, the pros and cons of using one, and other things that may affect your budget for a new home.

What Is a Mortgage Calculator With Taxes and Insurance?

A mortgage calculator with insurance and taxes is a financial tool that enables future homebuyers to estimate their monthly payment on a home mortgage loan with property taxes and insurance factored in. Some mortgage calculators only look at the loan principal, the interest rate, and allow users to compute the cost difference between a 15 vs. 30 year mortgage. However, as we discuss below, this won’t give prospective buyers the full picture of their costs. To get an accurate estimate, you need a mortgage calculator that factors in taxes, insurance, and PMI (private mortgage insurance, which some buyers are required to purchase).

Why Calculate Mortgage Payments with Taxes and Insurance?

Including just the interest and principal in a mortgage calculator is only part of the equation. Other factors can greatly influence how much you’ll pay each month with a certain house. These include:

•   Property taxes: Lenders often require borrowers to pay a portion of property taxes each month with their monthly payment.

•   Property insurance: Lenders require homeowners to purchase home insurance to protect both themselves and the lender. Depending on where you’re buying, you may also need earthquake or flood insurance.

•   Mortgage insurance: Mortgage insurance is needed when your down payment is below a certain threshold. With conventional loans, 20% is the magic number.

•   HOA fees: While they’re not typically paid with the mortgage, homeowners association fees are a cost of homeownership and it’s helpful to factor them in when you think about your budget.

How Does a Down Payment Work?

A down payment is the portion of a home purchase that is not financed. How much is a down payment? Different types of loans require different amounts. A government-backed loan, such as one backed by the Federal Housing Administration (FHA), may require a 3.5% down payment. A conventional mortgage loan can come with a down payment amount as low as 3% of the home price.

As noted above, borrowers who put down less than 20% typically have to also pay for private mortgage insurance (PMI) which covers the lender in case of default. (Jumbo mortgage loans can require a 10% to 20% down payment; these loans are usually for homes that exceed $726,200, or $1,089,300 in higher-priced counties.)

Average Mortgage Down Payment in 2023

The national average down payment was $34,248 in the second quarter of 2023. Don’t forget that at the closing, you’ll also have to pay homebuying closing costs, including a loan origination fee, which is usually about 1% of the loan amount.

How to Lower a Mortgage Down Payment

To lower the down payment on a home purchase, there are a few strategies you may be able to implement. The most effective way to lower your down payment, of course, is to buy a cheaper house. (Try using a home affordability calculator to see how much house your budget can comfortably handle.) Other options you may have include:

•   Choosing a different loan type: Some loans require higher down payments than others. If you can qualify for a conventional loan, a lender may agree to a 3% down payment. Plus USDA and VA loans don’t require down payments at all. If you are new to the homebuying process, seek out a home loan help center to learn more.

•   Down payment assistance: Some down payment assistance programs are loans while others are grants. If this is part of your strategy, you’ll want to apply well before you start house hunting.

•   Take care of your credit score: If you’re considered more of a risk to the lender because of a low credit score, paying attention to your score and making necessary payments on time may help you qualify for a lower down payment. It may also help you get a good mortgage rate.

•   Ask for help with closing from the seller: Getting help with closing costs from the seller won’t reduce your down payment amount, but you will need less money at closing.

Pros and Cons of Using a Mortgage Calculator With Taxes and Insurance

A mortgage payment calculator with taxes and insurance comes with both benefits and drawbacks. Before you use one, it’s important that you understand the tool you’re using so you don’t get ahead of yourself.

Pros:

•   Helps homebuyers get an estimate on monthly cost: When you’re first starting off, you may not even know how much house you can afford. A calculator can help you establish a range — especially a mortgage calculator with taxes and insurance.

•   Aids in budgeting and planning: When used properly well in advance, a mortgage calculator can help you prepare for the true cost of buying a home.

•   Can help you decide between houses: If you love multiple houses and don’t know which one to make an offer on, a mortgage calculator may help you narrow down the best financial choice for you.

Cons:

•   Does not account for preapproval: While you may be able to afford a down payment for a certain price tier, this does not mean a bank will loan you the amount you need. To truly understand what houses you would be able to put an offer on, you need to speak with a mortgage lender.

•   Your property taxes may increase: Property taxes can go up over time as home values rise and local governments do periodic reassessments.

•   You may need earthquake or flood insurance: Both policies, if needed, can add quite a bit to your expenses.

Tips on Mortgage Down Payments

As discussed, down payment assistance programs do exist, but they should be a part of your strategy from the beginning long before you make an offer. Lastly, before you apply for a mortgage, work on your credit score. A higher credit score may help you qualify for a mortgage with a lower down payment requirement.

The Takeaway

Use a mortgage calculator with taxes and insurance to get an accurate estimate of how much you’d spend each month on your mortgage, property taxes, and insurance. Try plugging in different combinations of home price and down payment amount to get a sense of how changing these factors would impact your monthly payments.

FAQ

What is the average mortgage payment with taxes and insurance?

As of August 2023, the average mortgage payment in the U.S. is $2,234. Most data sources do not include taxes and insurance with their calculations, which is why a mortgage calculator with taxes and insurance is a helpful tool to use when buying a home.

How much should I spend on mortgage and insurance?

A common rule of thumb is that you should spend no more than 28% of your gross monthly income on your mortgage payment, insurance, and other housing costs. Much more than this, and you may feel stretched too thin in other areas of your life.

Is 50% of income too much for a mortgage?

Probably. While it depends on your income and other assets, most homebuyers will find 50% too much to spend on a mortgage. And many lenders simply won’t approve a mortgage that takes up this much of a buyer’s income.

*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

SOHL1023245

Mortgage Repayment Calculator

A mortgage repayment calculator is a useful tool that helps homebuyers with financial planning. Using a mortgage payback calculator can enable you to make wise choices, maximize your payback plan, and ultimately pay off your debt and fully own your home in a way that suits your budget and lifestyle.

What Is a Mortgage Repayment Calculator?

A mortgage repayment calculator is a financial tool that helps simplify the complex world of home financing. The calculator helps current and potential homeowners calculate how much they will have to pay each month for a mortgage, depending on a number of variables such as the mortgage loan amount, down payment amount, interest rate, and loan term. Homebuyers can gain insight into how their financial obligations change over time and how various events may affect them.

Reasons to Use a Mortgage Repayment Calculator

There are several reasons you might want to use a mortgage repayment calculator:

1.    Accurate financial planning: By offering a monthly payment breakdown, a mortgage repayment calculator assists borrowers in precisely anticipating and budgeting for their expenditures.

2.    Comparative analysis: To examine how various loan terms such as 15 vs. 30 year mortgage, differing interest rates, or different down payment amounts would affect monthly payments, users can experiment with changing these variables in the calculator. All of this will be helpful in figuring out what is a good mortgage rate for your financial situation. (Not sure what price home might fit your budget in the first place? Use a home affordability calculator to get to that number.)

3.    Long-term cost evaluation: The mortgage repayment calculator can help you see the total interest paid over the course of the loan.

4.    Decision support for refinancing: The calculator provides information about possible savings for people thinking about refinancing their mortgage.

How Does a Mortgage Repayment Calculator Work?

To use a mortgage repayment calculator, you’ll type in the amount you’re borrowing, the term of the mortgage, and the interest rate. The calculator will compute the monthly payment amount, the total you’ll pay for the loan, and how much of that total payment is interest.

To compare various financial scenarios, you can change variables such as the interest rate or loan term. For a more thorough picture of all housing costs, some calculators may also include extra expenses like homeowners insurance, property taxes, homebuying closing costs, and private mortgage insurance. For a better understanding of how all these costs come together in your home purchase, consider visiting a home loan help center.

How Does a Down Payment Work?

A down payment is an initial amount of money a buyer puts towards the cost of a property. Down payment amounts can vary from 3% to 20% of the total home price. The down payment acts as a kind of security for the lender since it ensures a portion of the home price is paid upfront. A smaller down payment might necessitate extra expenses like private mortgage insurance (PMI) to safeguard the lender in the event of default, while a larger down payment frequently leads to a more favorable interest rate.

How to Lower a Mortgage Down Payment

There are various ways to reduce the down payment for a mortgage. One way is using government-backed loan programs such as an FHA loan which has a low down payment requirement. Investigate regional and national down payment assistance programs as well. Another way to lower the upfront costs of homeownership is to negotiate for the seller to pay a greater percentage of closing costs, which might free up more money for a downpayment.

Average Mortgage Down Payment in 2023

The national average down payment on a single-family home was $34,248 in the second quarter of 2023. First-time homebuyers typically make smaller down payments, averaging 8% of the home’s price, versus repeat buyers, who average 19% down payments. (Jumbo mortgage loans for higher-priced homes often require a larger down payment, typically 10% to 20%.)

Tips on Mortgage Repayment

Here are some ways to be smart about the mortgage repayment process:

1.    Create a realistic budget: Make sure your monthly spending record accounts for everything, including mortgage payments, property taxes, and home insurance costs.

2.    Automate payments: To prevent late fees and guarantee on-time mortgage payments, set up automatic payments.

3.    Make extra payments: Paying a little extra toward the loan principal when you have extra cash on hand can lower the total interest paid over the life of the loan. (Some lenders charge penalties for early repayment so be sure you read your loan terms carefully.)

4.    Have an emergency fund: By keeping at least three months of living expenses on hand to cover unforeseen costs, you can guarantee that you can continue to make mortgage payments even in difficult circumstances.

5.    Consider refinancing: Keep an eye on interest rates and periodically assess if it makes sense to refinance your mortgage. Interest rate adjustments or a credit score enhancement could make it possible for you to qualify for better mortgage terms.

6.    Communicate with your lender: Get in touch with your lender right away if you run into financial problems. A lender may provide short-term fixes or adjustments to assist you in overcoming obstacles and avoiding default.

The Takeaway

Proactive decision-making and smart budgeting will help ensure a successful mortgage repayment. A mortgage repayment calculator is a useful tool for understanding how a mortgage will affect your monthly budget, enabling you to plan for the future.

FAQ

Is $2,000 a month a high mortgage payment?

Whether $2,000 a month is considered a high mortgage payment depends on your income, expenses, and local housing market conditions. Nationwide, the average payment on a new mortgage is now more than $2,300 per month, so $2,000 is below the national average.

What happens if I pay an extra $500 a month on my mortgage principal?

Paying an extra $500 a month toward your mortgage principal can significantly reduce the total interest paid over the life of the loan and help you pay off the mortgage faster. Before you make extra payments, make sure you understand whether your mortgage has a penalty for early repayment.

Can you pay off a 30-year mortgage in 5 years?

Paying off a 30-year mortgage in 5 years can be done, but it would require making substantially higher monthly payments than are typical, which may not be feasible for most borrowers; however, making additional payments towards the principal can accelerate the payoff timeline.

*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

SOHL1023247