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Home loan calculator: Mortgage loan calculator for buying a home

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The primary factors to consider when determining how much you can afford to spend on a home include your income and monthly debt obligations (car payments, student loans, credit cards, etc.), how much money you have for a down payment and your specific financial goals. Various loan programs are available, offering a range of options for different situations. 

Ultimately, the best way to understand what is right for you is to talk to a licensed loan officer who can help you explore and understand what is right for you.

If you are pre-approved for a mortgage loan, use the Ent Mortgage Payment Calculator to estimate your monthly mortgage payment to figure out how much you need to pay every month. Your monthly payment goes towards the principal balance on your mortgage and the interest accrued during the last billing period. Pay your mortgage on time every month to avoid compound interest and late fees. Once you pay off the mortgage in full after a certain number of years, you will own the home outright.

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Home purchase price

The home purchase price is what you pay to purchase the home. You can look at listings for homes for sale in your neighborhood to get a rough estimate. Housing prices are also subject to change at a moment’s notice based on supply and demand. Consider postponing a purchase if prices are too high and you expect them to go down in the future.

Interest rate

The interest rate is what you pay on the money you borrow to buy the home. It is usually listed as an annual percentage rate (APR). Reach out to various financial institutions in your area to begin the preapproval process and compare the interest rates to save as much money as possible.

Your interest rate is based on your credit history and the federal funds rate set by the Federal Reserve. Interest rates will be higher during inflation, so consider waiting until rates go back down. You can also refinance your mortgage once rates go down if you expect home prices to rise. If your credit score is low, you can also work on building up your score to lock in a lower interest rate.

Loan term (years)

The loan term is the length of the repayment period, usually listed in years. You have between 15 to 30 years to pay off the mortgage by making regular monthly payments. The longer the loan term, the lower your monthly payment, but you will pay more in interest over the length of the loan. You can always pay more than the required amount every month to pay off your mortgage before the loan term expires to save on interest.

Down payment

The down payment is how much you initially invest in the home. It is represented as a percentage of the total home purchase price. You must determine how much you can afford to spend upfront when buying a home to borrow less money from the bank. The larger your down payment, the less you will have to pay in interest. You may want to wait to apply for a mortgage until you have a large amount of savings in the bank. Each lender has their own minimum down payment requirements as well.

Annual home insurance

Annual home insurance is how much you will pay in home insurance every year. You must have homeowners insurance to protect your property from damage. The price of home insurance ranges based on a number of factors, including where you live, the size and value of your home and the extent of your policy coverage. Locate your policy or research the average cost of policies in your area to find your monthly insurance premium. Multiply that number by 12 to get the annual amount.

Annual property tax

The annual property tax is how much you pay in property taxes to live in the home. All homeowners must pay property taxes. But the rate will vary based on the size and value of your home and where you live. East and west coast states typically have higher property taxes than those in the middle of the country.

Monthly HOA dues

Depending on where you live, you may also have to pay monthly homeowner’s association (HOA) fees to own the property. HOAs are typical in suburban communities where homes look similar. The properties may have a good location, but you must follow the HOA rules. You can avoid paying HOA dues by buying property in a non-HOA community.

Monthly mortgage insurance

If your down payment is less than 20%of the home purchase price, you need to pay for private mortgage insurance (PMI), which is designed to protect the lender should you default on the loan. The cost usually ranges from 1% to 3% of the total loan amount per year. You can avoid paying PMI by saving up for a 20% down payment or larger.

Don’t forget that buying a home can include additional costs such as closing costs, which range from 3% to 6% of the total home price, realtor fees, housing inspections and moving costs. Ensure you are financially prepared to own a home in your area before you fall for the house of your dreams.

Mortgage payment calculator FAQs

Monthly payments on a mortgage include the principal, interest, mortgage insurance, property taxes and homeowner's insurance amortized throughout the loan term. The formula for calculating monthly payments is M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1], where “M” is the monthly payment, “P” is the loan amount, “i” is the monthly interest rate and “n” is the number of monthly payments. The Ent Mortgage Payment Calculator allows you to enter your home purchase price, interest rate, loan term, down payment, annual insurance, property taxes, monthly HOA and mortgage insurance, then calculates an estimated monthly payment.

How much house you can afford with a $5,000 monthly mortgage payment would depend on your down payment, interest rate and loan term. Assuming a 6% interest rate, a 5% down payment and a 30-year mortgage, a $5,000 monthly mortgage payment inclusive of principal, interest, mortgage insurance, property taxes, homeowner's insurance and HOA dues can afford you a home in the $500,000 to $600,000 price range. 

To get the related monthly payment, you can use the Ent Mortgage Payment Calculator to simulate potential home values, interest rates and down payments.

The mortgage rate, loan term and loan type influence the monthly mortgage payment. Assuming an average interest rate of 6%, a 30-year fixed-rate mortgage with a principal amount of $300,000 would have a monthly principal and interest payment of around $1,798.65. In contrast, the total monthly payment after monthly property taxes, home insurance, mortgage insurance and HOA dues would add up to $2,719.69. Keep in mind that this is just an estimate, as the actual monthly payment can vary depending on factors such as the specific interest rate, down payment amount, property taxes and insurance costs.

Generally, financial experts suggest borrowing no more than three to five times your annual income for a mortgage. However, this can vary depending on your financial circumstances and the lender's criteria. For a more accurate estimate of how much you can borrow, you should speak with a lender or use a mortgage calculator that factors your income, expenses, and other financial information.

Buying a house will likely be one of the biggest financial decisions of your life, and it shouldn’t be made lightly. Ent is here to help you prepare your own home. Use this tool to determine how much home you can afford based on your budget. When estimating how much you can afford, remember that your living costs shouldn’t account for more than 50% of your take-home pay. If your mortgage payment is more than 50% of your earnings, you can easily fall further into debt if you lose your job or have a high cost of living.

Talk to the professionals at Ent to learn more about the home-buying process to prepare for the next chapter of your life.