Find the Right Mortgage For You
Calculate your monthly payment, interest rate, APR, and total interest using our mortgage calculator.
How it Works
- Enter your desired loan amount so we know how much money you would like for your mortgage.
- Enter your zip code and current credit status so we can retrieve the latest Rates and APR.
- Based on these, we’ll supply you with different mortgage options, the monthly payments of each, and the total cost of the loan.
- We’ll also provide pros and cons for each mortgage type to help you decide which is best for your situation.
Mortgage Calculator FAQs
The LowerMyBills mortgage calculator is a great loan calculator tool to use to figure out which type of home loan you should look to get based on your needs. Looking for lower interest payments? A 15 year mortgage may be for you. Looking for lower monthly payments? A 30 year mortgage may be up your alley. Looking for a combination of a lower rate and lower monthly payments? You may want to look at 5/1 ARM.
Use LowerMyBill’s mortgage calculator to estimate your monthly mortgage payment, give you an estimate interest rate and APR and show you your total interest you will pay over the course of the loan. You can adjust the loan amount and your estimated credit to see how your monthly payment will change.
Using the LowerMyBills Mortgage Calculator
In order to use the mortgage calculator, you will first need to provide a little information on yourself so we can give you an estimate of your monthly payment, interest rate and total interest paid based on the 3 most popular loan types. This information includes your estimated loan amount, your estimated credit and your current zip code. Don’t worry about having everything exact as this can be updated later on down the line.
The loan amount is a calculation of the home price minus the down payment home buyers are willing to put down. The price you are looking to pay for your home should be based on you income, your debts and how much you have already saved up for making a down payment. One rule that you may have heard is the 36% rule. This is a rule based on your DTI saying that if you should have a debt-to-income (DTI) that is less than 36% when you apply for a mortgage loan. The DTI can help the lender you are working with better see how much you can afford each month, as the higher the ration the less mortgage you will be able to afford.
Most mortgage lenders are looking for a 20% down payment for conventional loans. The reason for this is that the more you can pay down the better chance you have of the best interest rates. While 20% is the norm, there are a lot of exceptions. Some lenders offer mortgages with down payments as low as 5%, FHA loans offer down payments as low as 3% and VA loans don’t even require down payments.
How to Calculate your DTI
Your DTI is calculated by adding up all your debt payments (credit card debt, loans, potential mortgage payments) divided by your monthly pre-taxable income. Take this number, multiply by 100 and you get your DTI.
It is important to note that you can qualify for a mortgage with a DTI ratio up to 50%. The issue is that lenders don’t take budget items such as living expense, emergency savings and discretionary income into account, so it is really on you to factor those in to see the full picture. Truly understanding what you can afford can make you take the right steps as you don’t want to enter into a long term loan that is too expensive for your budget and could lead to a lot of financial stress.
For the mortgage rate box, you can see what you’d qualify for with our mortgage rates comparison tool. Or, you can use the interest rate a potential lender gave you when you went through the preapproval process or spoke with a mortgage broker. If you don’t have an idea of what you’d qualify for, you can always put an estimated rate by using the current rate trends found on our site or on your lender’s mortgage page. Remember, your actual mortgage rate is based on a number of factors, including your credit score and debt-to-income ratio.
On your results, you will see options of 30 Year, 15 Year and 5/1 ARM. The first two are fixed rate loans that are set over the course of the entire loan. The big difference between these two loans is that the 30 year can allow for lower monthly payments and more financial flexibility month to month, whereas the 15 year will most likely save you in interest over the course of the loan, as well as potentially give you a lower rate than a 30 year. With a 5/1 ARM, or 5/1 adjustable rate mortgage, the interest rate will change after an initial fixed period of time. An ARM”s interest rate will usually change once a year after the introductory period.
Monthly Mortgage Payment
Your full monthly mortgage payment breakdown is a combination of the principal + interest + escrow account payment (homeowners insurance + property tax + PMI or HOA fees if applicable)
To break this down further, the principal is the loan amount that your borrowed.
The interest is the additional money that you owe to the lender. This amount accrues over time and is a % of your overall loan. With a fixed rate mortgage, you will have the same principal and interest amount each month, but with amortization, the actual numbers change as you pay off the loan.
Home insurance is where you purchase a policy from an insurance provider that covers you in the event of theft or damage to your home. This insurance can cost anywhere from a few hundred to thousands of dollars and is required by your lender. Sites such as Policy Pilot are good options for comparing home insurance partners to make sure you are getting the best deal for your situation.
Property taxes are taxes by the county and district levied against you when you own a property in that county and district. These taxes vary from state to state and county to county. Regardless of the state or county, property taxes are calculated as a % of your home’s value. This value is reassessed once a year in some counties and as long as every 5 years in others.
PMI stands for private mortgage insurance and is a insurance premium policy required to secure a high risk loan from lenders. If you don’t have a 20% down payment or you don’t qualify for a VA loan, you are considered more of a risk and thus this insurance is required.
HOA Fees are fees due for being part of a homeowner’s association. This association is an organization in a planned community that has rules for the properties. When you purchase a property in this community, you agree to the rules and fees.
Identifying your Mortgage Goals
In the home buying process, if your goal is to make sure you have a low total monthly payment, you can do this by a few different ways.
Choose a long loan term
- If you extend the length of your loan, you will pay less month to month. This would mean going with a 30 year vs. a 15 year loan.
Put a higher down payment amount on the new home
- By putting more money up front, the overall amount of the loan is diminished, thus your monthly payments will be less.
Get the lowest rate available to you
- Having good credit and being able to put a down payment of 20% or more will set you up to get the best rate possible. Obviously, there are also bigger environmental factors that play apart in how high interest rates get, but being in control of your credit and finances will set you up to maximize the best rate in whatever market you find yourself in. The lower the interest rate the lower your monthly payment.
Buy a more affordable house
- Sometimes the timing isn’t right in the real estate market for your ultimate home and it may behoove you to buy a lower priced home where you can have lower monthly payments you can more easily afford.
If this is your goal, LowerMyBills would recommend either a 30 Year Fixed or 5/1 ARM based on your financial situation.
If your goal is to lower your overall interest payment, you can do this in a few different ways.
Choose a shorter loan term
By minimizing the term of your loan, you will pay more month to month but less over the long term. A 15-year mortgage will have a lower interest rate than a 30-year mortgage and due to the fact that you are paying more toward the principal amount each month, you’ll build equity in your home faster, get out of deb toner and save thousands in interest.
Increase your down payment
- By increasing the amount you put down, it lowers the loan amount and can help you get a better interest rate, thus lowering the overall interest payment on the loan.
Now that you’ve used the mortgage payment calculator and better understand the type of mortgage that is best for you along with the total cost, your next move will be to get preapproved by a mortgage lender.
Lucky for you, LowerMyBills has a great service that can match you with a lender and get you started on the application process to truly understand how much house you can afford by verifying your employment, income, credit and finances. This will give you a much better idea of how much money you need for your dream house and get you that much closer to making your housing dream a reality.