Understand your monthly payment before you buy.
Start with a home price, or start with the monthly payment youâre comfortable with. Everything updates as you type, with every dollar explained in plain English.
Early payments are mostly interest. Watch the balance fall and the interest pile up, then see what a little extra each month does.
Loan balance and interest paid
Drag or hover over the chart to see any year.
Pay it off faster
Add an extra amount toward principal every month.
Year-by-year breakdown
Loan length
Down payment
Lenders compare your monthly debts to your income before taxes. These are called debt-to-income (DTI) ratios. The limits below come from each programâs official guidelines. This is an educational check, not a preapproval.
Use gross income: before taxes and payroll deductions, not your take-home pay. A lender may count income differently after reviewing your documents.
Car payments, minimum credit card payments, student loans, personal loans, child support. Donât include rent youâll stop paying, utilities or groceries, and donât add the new mortgage again.
VA residual income
VA also checks how much money is left each month after your housing payment, debts, taxes and upkeep.
Gross income minus federal, state and local income taxes, Social Security and Medicare. Donât subtract retirement contributions or insurance. We start with a rough estimate of 78% of gross income; type your real number for a better answer.
What this could mean for you
The guidelines
What else lenders look at
Credit history and scores
Lenders review your payment history, current balances and program-specific credit rules. The score range you picked doesnât guarantee approval or a particular rate.
Income and employment
Lenders look for documented, stable income. Gross pay alone doesnât establish eligibility.
Cash to close and reserves
Your down payment, closing costs, where the money comes from, and sometimes savings left over after closing can all affect the decision. Reserves are also one of the most common compensating factors for higher ratios.
Automated vs. manual underwriting
Most loans are run through an automated system first (Fannie Maeâs Desktop Underwriter, Freddie Macâs Loan Product Advisor, FHAâs TOTAL Scorecard or USDAâs GUS). An approval there can allow higher ratios than the manual limits shown here. If the system refers the file to a person, the manual limits apply.
Property and program eligibility
USDA eligibility depends on the propertyâs location and household income. VA requires eligible service or entitlement. Every program has property standards.
Principal and interest
Principal is the money you borrowed. Interest is what the lender charges you to borrow it. On a fixed-rate loan, this part of your payment stays the same for the life of the loan, but the split changes: early on most of it is interest, and later most of it goes to principal.
Why property taxes are part of the payment
Property taxes fund local services like schools and roads. Most lenders collect one-twelfth of the yearly bill each month and hold it in an escrow account, then pay the bill for you. Your payment can change when the assessed value, local tax rates or exemptions change.
Homeowners insurance
Insurance protects the home against covered damage, and lenders require it. The cost depends on the home, the coverage and the insurer. Like taxes, itâs usually collected monthly through escrow and can change each year.
Mortgage insurance
Upfront program fee
Market average vs. your quote
The market average comes from Freddie Macâs weekly survey of lenders nationwide. It assumes a conventional loan, strong credit and 20% down. Your own rate can be higher or lower depending on your credit, down payment, loan type, points and lender, so get quotes from two or three lenders.
Temporary buydowns
Someone, usually the builder or seller, puts money into an account at closing that covers part of your payment for the first one to three years. Your rate (and payment) steps up each year until it reaches the full rate, which then stays for the rest of the loan. Lenders qualify you at the full rate. Fannie Mae and Freddie Mac allow up to 3 years, up to 3% below the full rate, rising no more than 1% a year.
Adjustable-rate mortgages (ARMs)
An ARM has a fixed rate for the first 3, 5, 7 or 10 years. After that, the rate resets on a schedule to the index plus the margin, limited by caps. If market rates are higher then, your payment goes up; if theyâre lower, it can go down. ARMs make the most sense if you expect to sell or refinance before the fixed period ends, and you can afford the worst-case payment if you donât. USDA guaranteed loans donât offer ARMs.
Interest rate vs. APR
The interest rate sets your monthly principal-and-interest payment. The APR folds in certain fees and points to show the yearly cost of the loan, so itâs usually a little higher. Use the interest rate in this calculator, and use APR to compare offers between lenders.
What isnât included here
Closing costs, prepaid items, lender fees, discount points, utilities, maintenance and repairs. Your final payment also depends on your confirmed rate, escrow amounts and mortgage insurance quote.
Does this mean I qualify?
No. A lender still reviews your income, debts, credit, savings, the property and other factors. This tool helps you understand the numbers before that conversation.