Mortgage Calculator with Property Tax and Insurance
House hunting gets expensive fast once you look past the listing price. This free mortgage calculator with property tax and insurance turns a home price, down payment, interest rate and loan term into the figures you actually budget with: the monthly principal and interest payment, a fuller mortgage payment with taxes and insurance, and the total interest you would pay over the life of the loan.
Related reading: Guide: how much house can you afford?
Last updated: October 22, 2026
Your result
The formula
Loan amount = home price − down paymentMonthly rate = annual interest rate ÷ 12 ÷ 100Monthly payment = loan × [rate × (1+rate)^months] ÷ [(1+rate)^months − 1]
A worked example
Take a $350,000 home with $70,000 (20%) down: that leaves a $280,000 loan. At 6.5% over 30 years, principal and interest works out to roughly $1,769 a month, with about $356,900 of interest paid if you carry the loan full term.
More about the Mortgage Calculator
What a monthly mortgage payment is made of
Your mortgage payment has more moving parts than most quotes show. In the US, the number that actually leaves your bank account each month is usually PITI, four slices working together: principal, the part that chips away at your loan balance; interest, what the lender charges for the money; property taxes, your local authority's annual bill split into twelfths; and homeowners insurance, the policy your lender insists on. A quote that only covers principal and interest is not the whole story.
Put down less than 20% on a conventional US loan and a fifth slice shows up: private mortgage insurance, typically $30 to $70 a month per $100,000 borrowed, hanging around until you reach 20% equity. That is exactly why the calculator asks for tax, insurance and HOA figures next to the loan itself, the true monthly cost of a home is always bigger than principal and interest on their own.
UK borrowing: the 4.5x income rule
UK lenders typically cap borrowing at around 4.5 times your annual income, with some stretching to 5x or more for high earners or professionals. On a £60,000 salary that means roughly £270,000 of mortgage, your deposit on top sets the home price you can target.
Unlike the US 28% rule, the income multiple is the binding constraint for most UK buyers. Lenders also stress test: they check you could still pay if rates rose above the revert rate.
First time buyers should factor stamp duty relief into the deposit maths, the tax bill on a first home is far lower than on a second property at the same price.
What an FHA loan actually is
An FHA loan is a mortgage insured by the Federal Housing Administration, the government backing lets lenders accept lower down payments and lower credit scores.
The headline feature is 3.5% down with a credit score of 580 or higher; scores of 500 to 579 can still qualify with 10% down.
The trade off is mortgage insurance (MIP) on nearly every FHA loan. It protects the lender, and you pay for it twice, upfront and monthly.
MIP explained: the two premiums
Upfront MIP is 1.75% of the loan amount, added to your balance at closing, most buyers finance it rather than paying cash.
Annual MIP is 0.55% per year for most 30 year loans with less than 5% down, billed as one twelfth added to each monthly payment.
Unlike conventional PMI, annual MIP usually lasts the life of the loan when you put less than 10% down. It does not drop off at 20% equity.
Down payment: how low can you go
580+ credit score → 3.5% minimum down. On a $300,000 home that is $10,500 out of pocket.
500 to 579 credit score → 10% minimum down. Below 500, FHA is generally not available.
Gift funds from family are allowed for the down payment, one reason FHA is the classic first time buyer loan.
FHA loan limits for 2026
FHA caps the loan amount by county: $541,287 in most counties (the 2026 national floor) and up to $1,249,125 in high cost areas for a single unit home.
Limits follow the conforming loan ceiling, so expensive markets like California and New York get the higher tier automatically.
If your price pushes past the local limit, you will need a conventional loan or a bigger down payment to stay under it.
FHA vs conventional: which wins
FHA wins when your credit is fair (580 to 680) or your down payment is small, approval is easier and the rate is often lower.
Conventional wins once you have 20% down or strong credit: no upfront MIP, and PMI drops off automatically at 20% equity.
Run both in the calculator above, the monthly MIP is the line that usually decides it.
Mistakes to avoid with FHA loans
Don't forget the upfront MIP is financed, your loan balance starts higher than the price minus down payment.
Don't assume MIP disappears: with less than 10% down it stays for the life of the loan unless you refinance out of FHA.
Don't skip the conventional comparison, with 10 to 15% down and decent credit, conventional is frequently cheaper per month.
A $250,000 purchase, priced line by line
Suppose a buyer with a credit score in the 580-plus band chooses a $250,000 home and puts down the FHA minimum of 3.5 percent. The down payment is 250,000 × 0.035 = $8,750, leaving a base loan of $241,250. The upfront mortgage insurance premium is 1.75 percent of that base loan, which is 241,250 × 0.0175 = $4,221.88. Financed into the loan, as most buyers choose, it brings the amount actually owed at closing to $245,471.88.
At 6 percent over 30 years, that financed amount gives a principal and interest payment of about $1,471.73 a month. The annual mortgage insurance premium, 0.55 percent for this profile, adds 245,471.88 × 0.0055 ÷ 12 = about $112.51 a month on the calculator’s basis. Principal, interest and monthly MIP together come to roughly $1,584.24, and that is still before property taxes, homeowners insurance and any association dues join the bill.
Read that worked example for what it teaches about the structure rather than the exact figures. The down payment was the smallest part of the insurance story: it is the $4,221.88 added to the balance on day one, and the $112.51 collected every month for as long as the premium runs, that make an FHA payment behave differently from a conventional payment at the same price and rate. Comparing loans on rate alone hides both of those lines completely.
Fifteen years versus thirty on the same FHA loan
Hold the example loan steady, $245,471.88 financed at 6 percent, and change only the term. Over 30 years the principal and interest payment is $1,471.73 a month and the total interest across the loan comes to about $284,350. Over 15 years the payment rises to $2,071.43, which is $599.70 more every month, yet total interest falls to about $127,386. Choosing the shorter term saves roughly $156,964 in interest on the same house at the same rate.
The shorter term also builds equity far faster, because a much larger share of each early payment reduces principal instead of servicing interest. That matters specifically with FHA, since the usual escape from monthly mortgage insurance is refinancing into a conventional loan once your equity and credit allow it, a door the 15 year borrower reaches years earlier. Annual MIP levels and how long they run also vary with term and down payment size, so check the figures your lender quotes for each structure rather than assuming they carry across.
The honest counterweight is cash flow and qualification. A lender measures your debts against your income, and the higher 15 year payment counts in full, so some buyers who could service it in practice cannot qualify with it on paper. Others simply prefer keeping $599.70 a month of flexibility in their own hands during the early, expense heavy years of owning a home. The calculator’s job is to show both prices clearly; which risk you would rather carry is a household decision, not an arithmetic one.
The property side of FHA that buyers forget to budget for
An FHA appraisal is not only a valuation. Because the loan is government insured, the appraiser also checks the property against minimum standards covering basic health, safety and structural soundness. A home can be priced fairly and still stall an FHA purchase if the appraisal flags defects that must be repaired before the loan can close, and those repairs become a negotiation between buyer and seller at exactly the moment neither side has much patience left.
Plan for that possibility in two practical ways. First, look at any older or visibly tired property with the appraisal in mind before you offer: peeling paint, a failing roof, broken heating or unsafe wiring are the kinds of issues that surface. Second, keep a cash cushion beyond your down payment and closing costs, because a buyer who has spent every last dollar reaching the offer has nothing left when a modest repair becomes the price of keeping the purchase alive.
What a HELOC actually is
A HELOC is a revolving credit line secured by your home, like a credit card with a much bigger limit and a much lower rate.
You draw money as needed, pay interest only on what you use, and the available credit replenishes as you repay.
Typical terms: a 10 year draw period followed by a 20 year repayment period, with a variable interest rate.
The 80% CLTV rule that sets your limit
Most lenders cap your total borrowing at 80% of the home's value. That is your first mortgage plus the HELOC combined.
Maximum credit line = (home value × 0.80) − current mortgage balance; anything above that needs a rare exception.
In the example, $180,000 of equity only converts to an $80,000 line because of this cap.
Draw period vs repayment period
During the draw period (usually 10 years) you can borrow and repay freely, often with interest only minimum payments.
When repayment begins, you can no longer draw, and the balance amortizes over the remaining term, payments jump.
This calculator shows both numbers side by side so the jump never surprises you.
Reading the two payment figures
The interest only payment is the cheapest monthly cost of carrying your draw. It never reduces the balance.
The P&I figure spreads the drawn amount over a 20 year repayment schedule at the entered rate.
Budget for the P&I number, not the interest only one, if you want the debt actually gone.
The variable rate risk
Unlike a fixed mortgage, HELOC rates float with the prime rate, the 2026 environment has made this very real.
A 2 point rate rise on a $50,000 draw adds about $83 a month to the interest only payment.
Ask your lender about rate caps and whether a fixed rate lock option exists on draws.
Mistakes to avoid with a HELOC
Don't treat the full credit line as free money, every draw is debt secured by your home.
Don't plan around the interest only payment alone; the repayment period jump is the real commitment.
Avoid maxing the line right before a refinance or sale, high utilization can spook underwriters and appraisers.
How this calculator turns your home into three numbers
Everything starts with combined loan to value, or CLTV: your mortgage balance plus the HELOC limit you want, divided by your home’s value. Lenders think in CLTV because it measures their total exposure against the property if prices fall.
From there the maths is deliberately simple. The interest only figure is your drawn balance multiplied by the annual rate and divided by twelve. The principal and interest figure runs that same balance through the standard amortization formula over the repayment years you enter.
Because a HELOC rate is variable, treat every result as a snapshot at today’s rate rather than a promise. The calculator’s job is to show the shape of the commitment, the limit you can reach, the cheapest legal payment, and the payment that actually clears the debt.
A worked example: funding a $40,000 kitchen renovation
Suppose you draw $40,000 for a kitchen at 8.5%. During the draw period the minimum interest only payment is $40,000 multiplied by 8.5% and divided by twelve, $283.33 a month. That number feels painless, which is precisely the trap: after ten years of minimum payments you would still owe the full $40,000.
Spread over twenty years at the same 8.5%, that $40,000 balance costs $347.13 a month in principal and interest. Paying $347.13 from the very first month, instead of the $283.33 minimum, means the balance is gone on schedule and the repayment period payment jump never happens.
Stress test the example before you copy it. If the rate climbed two points to 10.5%, the interest only minimum on the same draw would rise to $350 a month. If that higher figure would strain your budget, the draw is too big, reduce the project scope now, not when the rate actually moves.
Rate caps and fixed rate locks: the two safety features worth asking about
Many HELOCs include a lifetime cap that limits how high the variable rate can ever go, and some limit how far it can move in a single adjustment. Ask for both numbers before you sign: a cap five or six points above your starting rate is protection against a shock, not against ordinary rises.
A second feature, offered by many lenders, lets you convert part of a drawn balance into a fixed rate loan inside the HELOC, with its own term and payment, while the rest stays variable. It suits a large one off expense, a roof, a renovation. That you want to repay on a predictable schedule.
Neither feature is automatic, and terms vary widely between lenders, so you usually have to ask. When you compare offers, put the cap, the lock option, the margin over prime and the draw period fees on one page; the cheapest starting rate is often not the cheapest line over ten years.
Start with gross income, not take home
Lenders size you up on pre tax income, so enter your salary before taxes and deductions come out. Include steady second income you can document, leave one off windfalls out. Smart move: run it once on base pay alone for the conservative number, then again with reliable bonuses to see the upside.
List every real monthly debt
Tally the minimums on credit cards, car loans, student loans and any court ordered payments. Lenders go by the minimum required payment, not what you actually send each month, so enter those figures. Rent, utilities and groceries do not count here; they are not debts in the eyes of the 36% cap.
Understand the two caps
The 28% cap limits housing costs on their own; the 36% cap limits all your debts put together. Whichever one gives the smaller payment is the binding one, and the calculator shows you which it is. If the 36% cap is the bottleneck, clearing a single monthly debt can raise your max price more than a modest pay rise would.
The rate and term move the needle
A higher rate means a heavier payment factor, so the same monthly budget supports a smaller loan. A 15 year term carries a bigger factor than a 30 year term, which means it buys less house at the same payment. Re run the math at a rate half to one percent above your quote. That is your comfort margin.
Down payment changes everything
Put more down and the same monthly payment buys a bigger price, because the loan itself stays fixed. Twenty percent is the classic benchmark. It is what sidesteps PMI on conventional loans. Just do not drain yourself to get there: arriving at closing with zero emergency fund is its own kind of risk.
Treat the number as a ceiling, not a target
Property taxes, insurance, maintenance and HOA dues all stack on top of principal and interest. Plenty of buyers end up happiest 10 to 20% below their max, a payment has to survive real life, not just the spreadsheet. And remember, this is a planning estimate: a lender's pre approval is the final word before you start making offers.
What you can afford on $80k, $100k, $120k and $150k
Lenders commonly use the 28/36 rule: housing costs (principal, interest, tax, insurance) at or under 28% of gross monthly income, and all debts under 36%. On an $80,000 salary ($6,667/month), 28% is about $1,867 a month for housing; on $100,000 ($8,333/month) about $2,333; on $120,000 ($10,000/month) about $2,800; on $150,000 ($12,500/month) about $3,500.
Those monthly budgets translate into very different home prices depending on rates, taxes and down payment. Enter your own numbers above, local property taxes move the answer more than most buyers expect.
Remember the 36% back end cap: if you carry car payments or student loans, your approved housing number shrinks. Paying down other debts is often the fastest way to raise the home price you qualify for.
Self employed? Lenders average your bank statement income
No tax return does not have to mean no mortgage. Bank statement loans, built for self employed borrowers, freelancers and 1099 workers, qualify you on deposits instead: the lender averages 12 or 24 months of bank statements, then applies an expense factor (often 10% to 50% depending on your trade) to estimate true income.
Worked example: average deposits of $15,000 a month with a 30% expense factor count as $10,500 a month of qualifying income, $126,000 a year. Enter that figure in the income field above, not your gross deposits, or the calculator will overstate what a lender will approve. Rates on bank statement loans usually run higher than standard mortgages, so test a rate about a point above today's average too.
Keeping the house on one income after divorce
If you are working out whether you can keep the home alone, run this calculator on your income only, do not include your ex partner's contribution, and do not count child or spousal support until it is court ordered and documented. Lenders typically want to see six months of on time support payments and at least three years of payments still to come before they count it as income.
Add a maintenance sinking fund to your budget: roughly 1% of the home's value per year, set aside monthly, so a roof or furnace bill does not land on a credit card. If the numbers only work with the support included, or the payment eats more than about a third of your take home pay, compare selling and splitting the equity, and if you keep the house, look at a cash out refinance to buy out your spouse's share.
What PMI actually is
Private mortgage insurance protects your lender, not you, against losses if you default on a low down payment loan.
Conventional lenders require it whenever your down payment is under 20%, and it is usually bundled into your monthly payment.
It is not homeowners insurance: PMI never protects your belongings or covers damage to the house.
How much PMI costs you
Most borrowers pay 0.3% to 1.5% of the loan amount per year, set by down payment size, loan type, and credit score.
A quick rule of thumb: expect roughly $30 to $70 per month for every $100,000 you borrow, before your exact rate is known.
Better credit and a bigger down payment both push the rate down, the difference between 5% and 15% down can halve your monthly PMI.
When PMI drops off on its own
Under the Homeowners Protection Act, your servicer must cancel PMI automatically when your scheduled balance reaches 78% of the original home value.
You can request cancellation earlier, at 80% of the original value, as long as your payment history is good.
Home price appreciation alone does not trigger automatic termination; the law looks at your scheduled amortization against the original value.
How to remove PMI early
Making extra principal payments is the fastest DIY route: every extra dollar moves your 80% request date closer.
Request cancellation in writing once you hit 80%, servicers do not always remind you, and the savings start the month they approve it.
If your home has gained serious value, refinancing into a new loan at 80% LTV or below drops PMI entirely, just weigh the closing costs.
PMI vs MIP: the FHA version
FHA loans charge MIP (mortgage insurance premium) instead of PMI: an upfront 1.75% of the loan plus an annual premium billed monthly.
Unlike conventional PMI, annual MIP usually lasts for the life of the loan. It does not drop off at 78% automatically.
The common escape hatch is refinancing into a conventional loan once you have 20% equity, which trades MIP for a cancellable PMI or none at all.
PMI mistakes that cost homeowners thousands
Waiting for the automatic 78% drop instead of requesting cancellation at 80%. That gap is often a full year of needless premiums.
Assuming a hot housing market removes PMI by itself: appreciation only helps if you refinance or get a new appraisal, never automatically.
Forgetting PMI when comparing loan offers, a lower rate with higher PMI can cost more per month than a slightly higher rate with less PMI.
PMI by home price: $300k, $400k and $500k
PMI scales with your loan amount, so the same rate costs very different dollars on different homes. Take a 10% down payment and a mid range PMI rate of 0.5% per year: on a $300,000 home ($270,000 loan) that is about $112 a month; on a $400,000 home ($360,000 loan) about $150 a month; on a $500,000 home ($450,000 loan) about $188 a month.
At the top of the typical range (1% per year), those same loans cost roughly $225, $300 and $375 a month. The lesson: a bigger down payment does double duty. It shrinks the loan PMI is calculated on AND usually lowers your PMI rate.
Use the calculator above with your actual home price and down payment, these examples assume 10% down and 0.5 to 1.0% annual PMI for illustration.
How to use the Mortgage Calculator
- Enter the home price and the down payment you plan to put down.
- Type in the annual interest rate your lender quoted you.
- Pick the loan term, 30 and 15 years are the usual choices.
- Add estimated annual property tax and insurance, plus any monthly HOA fee, then hit Calculate for the fuller monthly figure.
FHA loan questions
What is an FHA loan?
A mortgage insured by the Federal Housing Administration. The government insurance lets lenders offer 3.5% down payments and accept credit scores as low as 580 (500 with 10% down). In exchange, borrowers pay mortgage insurance premiums, 1.75% upfront and 0.55% annually on most 30 year loans, which the calculator above builds into your monthly payment.
How much is MIP on an FHA loan?
Two parts. The upfront MIP is 1.75% of the loan amount, on a $340,000 loan that is $5,950, usually rolled into the balance. The annual MIP is 0.55% per year for most 30 year loans with less than 5% down, which works out to about $155 a month on that same loan. Together they are the reason an FHA payment runs higher than the bare principal and interest.
Can I remove MIP from my FHA loan?
With less than 10% down, annual MIP stays for the life of the loan. It does not cancel at 20% equity like conventional PMI. With 10% or more down, MIP drops off after 11 years. The common escape hatch is refinancing into a conventional loan once you owe 80% or less of the home's value, which eliminates the insurance entirely.
What are the FHA loan limits for 2026?
FHA limits are set per county: $541,287 for a single unit home in most counties (the 2026 floor set by HUD), rising to $1,249,125 in high cost areas like parts of California and New York. The exact ceiling in your county depends on local median home prices, so check your county's figure before house hunting at the top of your budget.
What credit score do I need for an FHA loan?
A 580 score qualifies you for the minimum 3.5% down payment. Scores from 500 to 579 can still get an FHA loan but need 10% down. Below 500, FHA financing is generally unavailable. Lenders may also layer their own minimums on top, so a 620 is a safer practical target for the best rates.
Is FHA or conventional better?
It depends on your down payment and credit. FHA usually wins for first time buyers with fair credit or under 10% down, because approval is easier and rates are competitive. Conventional usually wins with 20% down or strong credit, no upfront insurance fee, and PMI cancels automatically at 20% equity. Use the calculator above to compare the true monthly cost of each, MIP and PMI included.
How much FHA loan can I get?
Two ceilings apply: your county's FHA loan limit and what your income supports, lenders generally cap total housing costs around 31% of gross monthly income and all debts around 43 to 50%. Enter your numbers in the calculator above with a realistic rate to see the payment, then work backward from a payment you are comfortable with.
Does the 3.5% down payment include closing costs?
No, the 3.5% is just the down payment. Closing costs (lender fees, appraisal, title, prepaid taxes and insurance) typically add another 2% to 5% of the price, so budget for both. Seller concessions up to 6% of the price are allowed on FHA loans and can cover a large share of those costs.
How is the monthly MIP amount on an FHA loan worked out?
Take the annual premium rate for your loan profile and spread it across twelve payments. On the $250,000 example in the guide, the financed loan is $245,471.88 and the annual MIP rate is 0.55 percent, so the yearly premium is 245,471.88 × 0.0055 = about $1,350.10, which the lender collects as roughly $112.51 inside each monthly payment. The amount adjusts as it is recalculated against the loan over time.
What else gets added to my monthly FHA payment besides principal, interest and MIP?
Usually property taxes and homeowners insurance, collected monthly into an escrow account and paid out by the lender when the bills fall due, which is why the calculator asks for both estimates. Homes in managed communities add association dues on top. None of these are lender profit. They are your own bills pre collected, but they are real money leaving your account monthly, so a payment comparison that leaves them out understates what ownership will actually feel like.
HELOC questions
What is a HELOC?
A home equity line of credit is a revolving loan secured by your home. You get an approved credit limit, draw money as needed during a draw period (usually 10 years), and pay interest only on what you use. When the draw period ends, a repayment period (usually 20 years) begins during which you pay down the balance with no new draws allowed.
How much HELOC can I get?
Most lenders allow total borrowing up to 80% of your home's value, minus your existing mortgage balance. On a $500,000 home with a $320,000 mortgage, that is ($500,000 × 0.80) − $320,000 = an $80,000 maximum line, even though you have $180,000 of equity. Stronger credit and income can sometimes unlock exceptions above 80%.
What is the difference between the draw period and the repayment period?
The draw period (typically 10 years) is when you can borrow, repay, and borrow again, usually with low interest only minimum payments. The repayment period (typically 20 years) follows: no new draws are allowed and the outstanding balance is amortized, so monthly payments jump significantly. This calculator shows both payment figures.
Is an interest only HELOC payment enough?
It keeps the loan current but never reduces the balance, so you will still owe the full drawn amount when repayment begins. On a $50,000 draw at 8.5%, interest only is $354.17 a month while the 20 year amortized payment is $433.91. Paying at least the P&I figure from the start gets the debt actually shrinking.
How is HELOC interest calculated?
Interest accrues on the balance you have actually drawn, not on your full credit limit. Most lenders calculate it from the outstanding or average daily balance at your variable APR, so a month at the interest only minimum on a $30,000 draw at 9% costs $225. Pay the balance down and the next month’s interest falls with it.
What is the difference between LTV and CLTV?
LTV looks at one loan against your home’s value; CLTV adds every loan secured by the home together. If your house is worth $500,000, your mortgage is $320,000 and you want an $80,000 HELOC, your mortgage LTV is 64% but your CLTV is 80%, the figure lenders actually cap, because it measures their combined exposure.
How does the prime rate affect my HELOC payment?
Most HELOC rates are priced as the prime rate plus a fixed margin set when you open the line. When prime rises by one percentage point, your rate follows, and the interest only payment on a $50,000 draw rises by about $41.67 a month. Your margin stays fixed. It is the prime part that moves your payment.
What fees come with a HELOC?
Costs vary widely. Some lenders charge an application or origination fee, an annual fee, and sometimes an early closure fee if you shut the line within the first few years; others advertise no closing costs but price them into a higher margin. Ask for the full fee schedule in writing and weigh it against the rate, not just the headline APR.
Is HELOC interest tax deductible?
Under US rules, HELOC interest is generally deductible only when the money is used to buy, build or substantially improve the home that secures the loan, and only if you itemize. Interest on draws spent on other things, a car, tuition, consolidated debts, generally is not. State rules differ, so confirm your situation with a tax professional.
What happens when the draw period ends if I still owe money?
Draws stop, and the balance converts to repayment: you pay principal and interest over the remaining term, commonly twenty years, with no ability to borrow again. On a $50,000 balance at 8.5% that means $433.91 a month instead of the $354.17 interest only minimum, the jump this calculator shows.
How much house can you afford, questions
What is the 28/36 rule?
It is a classic lender guideline: your housing payment should not exceed 28% of your gross monthly income, and your total monthly debts (housing plus cards, auto loans, student loans) should not exceed 36%. Lenders treat these as ceilings, not targets. Our calculator applies both and uses whichever limit is tighter for your numbers.
Does this include property taxes and insurance?
No, this estimate covers principal and interest only, which is why it is labeled an estimate. Real lenders apply the 28/36 caps to PITI (principal, interest, taxes, and insurance), so your true max price will be somewhat lower once taxes and homeowner's insurance are added. Use the result as an upper bound, then budget taxes and insurance separately.
What down payment should I assume?
20% is the standard assumption because it avoids private mortgage insurance (PMI) and matches most conventional loan guidance. You can buy with 3 to 10% down through many programs, but a smaller down payment shrinks your max price at the same monthly payment and adds PMI. Try a few down payment levels to see the trade off.
Does my credit score change how much house I can afford?
Yes, indirectly. Your credit score drives the interest rate you qualify for, and the rate changes your payment factor - a 1% higher rate can cut your max loan by roughly 10%. The calculator uses whatever rate you enter, so use a realistic quote for your credit tier. If your score is borderline, assume a slightly higher rate to be safe.
Why is my max price lower than I expected?
Usually it is one of three things: monthly debts eating your 36% cap, a higher interest rate than you assumed, or a smaller down payment stretching the same payment over less house. The calculator shows which cap is binding, if the 36% one wins, paying down a car loan or card balance can raise your number noticeably.
Is this the same as getting pre approved?
No. This is an estimate only guideline based on the standard 28/36 rule, not a lender commitment. A real pre approval considers your credit report, employment history, assets, and the specific loan program. Use this to set a realistic budget before you talk to lenders or tour homes.
Should I include bonuses and overtime in my income?
Only if they are steady and documented. Lenders usually want to see two years of consistent bonus or overtime income before counting it, and many will average it rather than take the best year. When in doubt, run the calculation with base salary first, then see how much the extra income adds as a bonus scenario.
How much should I have saved beyond the down payment?
More than most first time buyers expect. Plan for closing costs, moving expenses, and an emergency fund that covers several months of the new payment, plus a repair buffer, because furnaces and roofs never fail politely. A calculator number is only as safe as the cash cushion sitting behind it.
Is it better to buy less house than the calculator says I can afford?
Often, yes. The 28/36 rule gives you a maximum, not a target, taxes, insurance, maintenance and everyday life still have to fit in your budget. Many comfortable homeowners buy below their max so a job change or a big repair never becomes a crisis. Think of the result as a ceiling, not a goal.
Can self employed borrowers get a mortgage?
Yes, through bank statement loans that qualify you on 12 to 24 months of deposits instead of tax returns. Expect higher rates (often 1 to 2 points above conventional), larger down payments (10 to 20%), and bigger cash reserves. Keep clean, consistent deposits, large unexplained transfers raise red flags.
PMI questions
What is PMI?
Private mortgage insurance is a monthly premium you pay on a conventional mortgage when your down payment is under 20%. It protects the lender, not you, if you default, and it is usually added to your monthly mortgage payment. Once you build enough equity, it can be cancelled.
How much is PMI per month?
Most borrowers pay 0.3% to 1.5% of their loan amount per year, divided by 12. On a $315,000 loan at 0.75%, that is about $197 a month. Your exact rate depends on your down payment size, loan type, and credit score, bigger down payments and better credit mean cheaper PMI.
How do I remove PMI early?
Make extra principal payments to reach 80% loan to value faster, then request cancellation. A lump sum works too, even one extra payment a year can shave years off your PMI. If your home has appreciated significantly, refinancing into a loan at 80% LTV or below removes PMI entirely, though you should weigh the closing costs first.
What is the difference between PMI and MIP?
PMI applies to conventional loans and can be cancelled at 80% LTV. MIP is the FHA version: an upfront premium of 1.75% of the loan plus an annual premium, and the annual MIP usually lasts for the entire life of the loan. FHA borrowers typically escape MIP by refinancing into a conventional loan once they reach 20% equity.
Does refinancing remove PMI?
Yes, if your new loan is 80% or less of your home's current appraised value, the new loan has no PMI. This works especially well when home values have risen since you bought. Just remember that refinancing restarts your loan term and adds closing costs, so compare the total savings, not just the PMI you are dropping.
Can I avoid PMI entirely?
The simplest way is putting 20% down. Alternatives include a piggyback loan (an 80-10-10 structure), lender paid mortgage insurance in exchange for a slightly higher rate, or a VA or USDA loan, which have no monthly PMI at all. Run the numbers: sometimes paying PMI for a few years beats waiting years to save a bigger down payment.
Is PMI tax deductible?
PMI deductibility has changed over the years with temporary extensions by Congress. Check current IRS rules for the tax year in question, or ask a tax professional, as the deduction is not permanently in the tax code.
Is it better to wait for 20% down or buy now with PMI?
Waiting saves PMI (typically 0.4 to 0.55% of the loan annually) but risks rising prices while you save. Buying with PMI lets you start building equity sooner, and PMI can be removed once you reach 20% equity. Run both scenarios: if home prices in your area rise faster than your savings rate, buying sooner often wins.
What is lender paid PMI (LPMI)?
With lender paid PMI you pay no separate monthly insurance premium; instead the lender charges a slightly higher interest rate, often around 0.25% more, for the life of the loan. It can mean a lower monthly payment than borrower paid PMI, but unlike BPMI it can never be canceled; only refinancing removes it. It's usually best if you plan to sell or refinance within a few years.
When does PMI cancel automatically at 78% LTV?
Under the US Homeowners Protection Act, your servicer must automatically terminate PMI when your loan balance is scheduled to reach 78% of the original home value, no request needed, as long as you're current on payments. You don't have to wait: you can request cancellation earlier at 80% LTV with a written request. Note the percentages use the original price or appraised value, not today's market value.
Frequently asked questions
Does this include property tax and insurance?
It does, the moment you fill in the optional annual tax and insurance fields, the calculator folds a monthly share of each into the principal and interest figure for a more honest estimate.
How much house can I afford on my salary?
A widely used yardstick: keep housing costs under 28% of your gross monthly income and total debts under 36%. Try a home price in this mortgage calculator, look at the estimated monthly payment, and ask whether it sits comfortably inside your take home pay.
Should I pay points to lower my mortgage rate?
One point costs 1% of the loan upfront and typically shaves about 0.25% off your rate. It only pays for itself if you stay put long enough, on a $280,000 loan, a $2,800 point saving you $40 a month breaks even after roughly 70 months, nearly 6 years.
How much does PMI add to a monthly mortgage payment?
In the US, private mortgage insurance usually runs $30 to $70 a month for every $100,000 borrowed, so a $300,000 loan with 10% down could cost you $90, $210 extra monthly. In the UK and Australia, lenders mortgage insurance kicks in on much the same terms when deposits dip below 10 to 20%.
How is a monthly mortgage payment calculated?
Lenders apply the standard amortization formula: monthly payment = loan amount × [monthly rate × (1 + monthly rate)^months] ÷ [(1 + monthly rate)^months − 1], with the monthly rate being the annual rate ÷ 12 ÷ 100 and months being the term in years × 12. Early payments are mostly interest; the principal slice grows with each one. Type your numbers in above and the calculator runs the same formula instantly, taxes and insurance included.
Why did my monthly mortgage payment go up if my rate is fixed?
Your principal and interest portion truly never changes on a fixed rate loan, but most borrowers also pay property taxes and homeowner's insurance through the same bill, and those rise. A higher tax assessment or a more expensive insurance renewal pushes the total up even though the loan itself didn't budge. The calculator above separates the loan payment from taxes and insurance so you can see which part moved.
What percentage of my income should go to my mortgage?
A widely used guideline is keeping total housing costs around 28% of gross monthly income, with all debts under about 36 to 43%. It's a starting point, not a rule, high cost cities, big savings, or heavy student debt shift the sensible number. Run the calculator above, then stress test the payment against your full budget before letting a guideline decide for you.
Should I put 20% down or keep my cash savings?
A bigger down payment borrows less, skips mortgage insurance, and often unlocks better rates, but arriving at closing with no emergency fund is its own risk. First time buyers often succeed with smaller down payments and protected savings. Enter a few down payment sizes in the calculator above and compare what each one does to the monthly payment versus your remaining reserves.
Should I choose a 15 year or 30 year mortgage?
A 15 year mortgage has higher monthly payments but much lower total interest and builds equity faster. A 30 year mortgage offers lower payments and more flexibility. Choose 15 year if you can afford the payment comfortably; choose 30 year for lower monthly commitment.
Should I choose an ARM or a fixed mortgage in 2026?
With 30 year fixed rates at 7.40% and 5/6 ARMs roughly a point lower, ARMs made up 8.5% of US applications in Sept 2026, the highest share in years. An ARM wins if you'll sell or refinance before the fixed period ends; a fixed rate wins for long term budget certainty. Always compare the ARM's lifetime cap payment against the fixed offer.