Mortgage Calculator

Understanding Mortgages

A mortgage is a loan used to purchase real estate, with the property serving as collateral. Monthly payments include principal, interest, taxes, and insurance (PITI).

Payment Formula:
M = P[r(1 + r)^n]/[(1 + r)^n - 1]

Where:

• M = Monthly payment
• P = Principal amount
• r = Monthly interest rate
• n = Total number of payments

PITI Components:

• Principal & Interest (P&I)
• Property Taxes
• Homeowners Insurance
• Mortgage Insurance (if applicable)

Mortgage Types & Features

Conventional Loans:

• Fixed-Rate: Rate stays constant
• ARM: Rate adjusts periodically
• Jumbo: Exceeds conforming limits
• Conforming: Meets Fannie/Freddie limits

Government Programs:

• FHA: Lower down payment options
• VA: For veterans, 100% financing
• USDA: Rural development loans
• 203k: Renovation financing

Term Options:

• 30-year: Lower payments
• 15-year: Lower total interest
• 20-year: Balanced option
• Custom terms available

Qualification & Costs

Qualification Factors:

• Credit Score (typically 620+)
• Debt-to-Income Ratio (≤ 43%)
• Employment History (2+ years)
• Down Payment Capability

Upfront Costs:

• Down Payment (3.5-20%)
• Closing Costs (2-5%)
• Points (Optional)
• Escrow Prepaids

Ongoing Expenses:

• Monthly PITI Payment
• Private Mortgage Insurance
• Home Maintenance (1-2%/year)
• HOA Fees (if applicable)

Smart Mortgage Strategies

Before Application:

• Improve credit score
• Save 20%+ down payment
• Research loan programs
• Get pre-approved

During Process:

• Compare multiple lenders
• Lock interest rate
• Review all documents carefully
• Prepare for closing costs

After Closing:

• Consider biweekly payments
• Build emergency fund
• Monitor refinance opportunities
• Keep proper documentation