Add All Fixed Costs and Variables to Get Your Monthly Amount

Figuring out whether you can afford to buy a home requires a lot more than finding a home in a certain price range. Unless you have a very generous — and wealthy — relative who's willing to give you the full price of your home and let you pay it back without interest, you can't just divide the cost of your home by the number of months you plan to pay it back and get your loan payment. Interest can add tens of thousands of dollars to the total cost you repay, and in the early years of your loan, the majority of your payment will be interest.

Many other variables can influence your monthly mortgage payment, including the length of your loan, your local property tax rate and whether you have to pay private mortgage insurance. Here is a complete list of items that can influence how much your monthly mortgage payments will be:

Interest Rate
The most significant factor affecting your monthly mortgage payment is your interest rate. Getting the very best interest rate that you can will significantly decrease the amount you pay each month, as well as the total amount you pay over the life of the loan.

Loan Term Overview
Fixed Rate Mortgage loans can be structured over various loan terms with longer terms requiring lower payments and shorter terms requiring higher payments but offering potentially lower interest rates. The Payment Calculator lets you see how changing the length of repayment or loan amount changes your potential mortgage payment. Adjustable Rate Mortgage loans are typically long term loans that provide for changes in your interest rate over time and frequently offer a lower interest rate than fixed rate mortgage loans.
Generally, shorter loan terms may result in higher monthly payments compared to longer loan terms, but they can potentially reduce the overall interest paid over the life of the loan. Choosing a loan term should be based on your financial goals and individual qualifications.

Private Mortgage Insurance (PMI)
Private Mortgage Insurance (PMI) may be required for Agency loans with lower down payments or higher loan to value ratios based on the loan amount divided by the property’s purchase price or appraised value. PMI is generally not required on non-Agency loan programs.
PMI protects the lender in the event of borrower default. Costs associated with PMI vary based on several factors, including loan size, type of loan, and insurer requirements. PMI premiums are typically added to the monthly housing payment and may impact the total house expense.

Property Taxes
Most lenders allow you to pay for your yearly property taxes when you make your monthly mortgage payment. Some may even require it. Your estimated yearly payment is broken down into a monthly amount, which is stored in an escrow account. Your lender then pays your taxes on your behalf at the end of the year. The amount may fluctuate if your county or city raises the tax rate or if your home is reevaluated and increases in value.

Property Insurance
Just like you have to carry insurance for your car, you have to carry insurance for your home. This protects you and the lender in case of a fire or other catastrophic accident. Most lenders allow you to include your property insurance in your monthly mortgage payment. Just like with PMI, the monthly amount is put into an escrow account, and the bill is paid on your behalf.

HOA Fees
Some homes especially condominiums and town homes — are part of a housing community that includes a community pool, fitness center and other amenities, such as lawn care. If you buy a home in such a community, you will have to pay homeowner's association fees. The amount depends on the community in which you live.

Using the above calculator can help you put together all of these complex variables to get a clear picture of your monthly mortgage payment so you know exactly how much to expect.

 

Calculator Disclaimer

This calculator is intended for illustrative purposes only and are hypothetical. We do not guarantee the accuracy of any calculation results scenarios. The figures displayed do not constitute an offer, quote, or solicitation of a product or service by AmWest Funding Corp or its affiliates.