Mortgage Calculator
A mortgage calculator is an automated tool that helps users determine the financial implications of taking out a mortgage loan. By entering information about the home price, down payment, interest rate, and loan term, users can estimate their monthly payments, total interest costs, and amortization schedule.
- Home Mortgage: Used to purchase residential real estate with the property serving as collateral
- Refinance Mortgage: Used to replace an existing mortgage with a new loan, often to secure a better interest rate
- Adjustable-Rate Mortgage: Features an interest rate that may change periodically based on market conditions
Home Mortgage: Paying Back a Fixed Amount Periodically
Use this calculator for basic calculations of home mortgage loans, or click the links for more detail on each.
Results:
| Loan Amount | $400,000.00 |
| Payment Every Month | $2,526.44 |
| Total of 360 Payments | $909,518.40 |
| Total Interest | $509,518.40 |
Refinance Mortgage: Paying Back a Lump Sum Due at Loan Maturity
Adjustable-Rate Mortgage: Predetermined Amount Due at Loan Maturity
Use this calculator to compute the initial value of an adjustable-rate mortgage based on a predetermined face value to be paid back at loan maturity.
Home Mortgage: Fixed Amount Paid Periodically
Home mortgages are the most common type of loan used to purchase residential real estate. Routine payments are made on principal and interest until the loan reaches maturity (is entirely paid off). Some of the most familiar home mortgage loans include conventional loans, FHA loans, VA loans, and USDA loans. Below are links to calculators related to loans that fall under this category, which can provide more information or allow specific calculations involving each type of loan.
| Conventional Loan Calculator | FHA Loan Calculator |
| VA Loan Calculator | USDA Loan Calculator |
| Jumbo Loan Calculator | Fixed-Rate Mortgage Calculator |
Refinance Mortgage: Single Lump Sum Due at Loan Maturity
Mortgage refinancing is the process of replacing an existing mortgage with a new loan, often to secure a better interest rate or change the terms of the loan. Unlike the first calculation, which is amortized with payments spread uniformly over their lifetimes, these loans have a single, large lump sum due at maturity. Some loans can also have smaller routine payments during their lifetimes, but this calculation only works for loans with a single payment of all principal and interest due at maturity.
Adjustable-Rate Mortgage: Predetermined Lump Sum Paid at Loan Maturity
Adjustable-rate mortgages (ARMs) feature interest rates that may change periodically based on market conditions. The initial interest rate is typically lower than fixed-rate mortgages, making them attractive to borrowers. The face, or par value of an adjustable-rate mortgage, is the amount paid by the borrower when the loan matures. ARMs are typically structured as zero-coupon loans where borrowers receive funds at a discount to their face value, then pay the face value when the loan matures.
Mortgage Basics for Borrowers
Interest Rate
Mortgage interest rates are influenced by economic factors such as inflation, employment rates, and Federal Reserve policies. Interest rate is the percentage of a loan paid by borrowers to lenders. For most mortgages, interest is paid in addition to principal repayment. Mortgage interest is usually expressed in APR, or annual percentage rate, which includes both interest and fees.
Compounding Frequency
Compound interest is interest that is earned not only on the initial principal but also on accumulated interest from previous periods. Generally, the more frequently compounding occurs, the higher the total amount due on the loan. In most mortgages, compounding occurs monthly.
Loan Term
A mortgage term is the duration of the loan, given that required minimum payments are made each month. The term of the loan can affect the structure of the loan in many ways. Generally, the longer the term, the more interest will be accrued over time, raising the total cost of the loan for borrowers, but reducing the periodic payments.
Types of Mortgages
There are several types of mortgage loans available to homebuyers.
Conventional Loans
Conventional loans are not insured by the government and are offered by private lenders. These loans typically require a higher credit score and larger down payment than government-backed loans. Conventional loans generally have a higher chance of approval for borrowers with strong credit and stable income.
Government-Backed Loans
Government-backed loans include FHA loans, VA loans, and USDA loans. These loans reduce the risk for lenders by providing government insurance or guarantees. Government-backed loans typically feature more lenient qualification requirements than conventional loans.
- Character—includes credit history, employment stability, and debt-to-income ratio
- Capacity—measures a borrower's ability to repay a loan using income and expense analysis
- Capital—refers to the borrower's available assets and down payment funds
- Collateral—the property being purchased serves as security for the loan
- Conditions—the current state of the housing market and economic conditions
Government-backed loans typically feature competitive interest rates and lower down payment requirements. Lenders may sometimes require private mortgage insurance (PMI) for loans with less than 20% down payment.
If borrowers do not repay their mortgage, lenders may foreclose on the property. Mortgages generally feature lower interest rates than other consumer loans because the property serves as collateral.
Examples of government-backed loans include FHA loans for first-time homebuyers, VA loans for veterans, and USDA loans for rural property purchases.