![]() Next, divide by your monthly, pre-tax income. To calculate your DTI, add all your monthly debt payments, such as credit card debt, student loans, alimony or child support, auto loans and projected mortgage payments. Here’s the formula for calculating your DTI:ĭTI = Total Monthly Debt Payments ÷ Gross Monthly Income x 100 The higher the ratio, the less likely it is that you can afford the mortgage. This ratio helps your lender understand your financial capacity to pay your mortgage each month. This rule says that your mortgage payment shouldn’t go over 28% of your monthly pre-tax income and 36% of your total debt. One of the rules you may hear as a homebuyer is the 28/36 rule or the debt-to-income (DTI) rule. Home price, the first input for our calculator, is based on your income, monthly debt payment, credit score and down payment savings. Here’s a breakdown with an explanation of each factor and how it influences your payment. SmartAsset’s mortgage payment calculator considers four factors - your home price, down payment, mortgage interest rate and loan type - to estimate how much you will pay each month. Factors That Determine Your Mortgage Payment The numbers can always be adjusted later.įor a more detailed monthly payment calculation, click the dropdown for “Taxes, Insurance & HOA Fees.” Here, you can fill out the home location, annual property taxes, annual homeowners insurance and monthly HOA or condo fees, if applicable. Don’t worry if you don’t have exact numbers to work with - use your best guess. In the dropdown box, choose your loan term. There are three fields to fill in: home price, down payment and mortgage interest rate. The first step to determining what you’ll pay each month is providing background information about your prospective home and mortgage. N = Number of Monthly Payments for 30-Year Mortgage (30 * 12 = 360, etc.) How SmartAsset's Mortgage Payment Calculator Works P = Principal Amount (initial loan balance) Mortgage Payment Formulaįor those who want to know the math that goes into calculating a mortgage payment, we use the following formula to determine a monthly estimate: To find a financial advisor who serves your area, try our free online matching tool. You can also try our home affordability calculator if you’re not sure how much money you should budget for a new home.Ī financial advisor can aid you in planning for the purchase of a home. You can adjust the home price, down payment and mortgage terms to see how your monthly payment will change. Send me an email and I'll get back to you, as soon as possible.SmartAsset’s mortgage calculator estimates your monthly mortgage payment, including your loan's principal, interest, taxes, homeowners insurance and private mortgage insurance (PMI). Additionally, you may have to pay mortgage insurance if you put down less than 20% on your home. One of the biggest drawbacks is that you are not protected by the government if you default on your loan. There are also some drawbacks to choosing a conventional mortgage. Additionally, you have more flexibility with your loan term than with government-backed mortgages. One of the biggest benefits is that you can usually get a lower interest rate than with other types of mortgages. There are many benefits to choosing a conventional mortgage. However, your interest rate may be lower than with a fixed-rate mortgage. This can be risky because your monthly payment could go up or down. With an adjustable-rate mortgage, your interest rate will change throughout the term of your loan. ![]() However, your interest rate may be higher than with an adjustable-rate mortgage. This can be helpful because it allows you to plan your budget around your monthly payment. With a fixed-rate mortgage, your interest rate will stay the same for the entire term of your loan. There are two types of conventional mortgages: fixed-rate and adjustable-rate. This means that if you default on your loan, you will not be protected by the government. A conventional mortgage is a type of home loan that is not guaranteed or insured by the government.
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