Mortgage payment calculator

Private mortgage insurance is generally required on a conventional loan when you put down less than 20%. It protects the lender, not you. It typically costs between 0.3% and 1.5% of the loan a year, depending on your credit score and down payment. Under the Homeowners Protection Act your lender must cancel it automatically once the balance reaches 78% of the original value, and you can usually request cancellation at 80%.

Because property tax, homeowners insurance and, below 20% down, PMI are usually collected with the mortgage payment into an escrow account. On a median-priced home those can add several hundred dollars a month. A calculator showing only principal and interest understates what you will actually pay.

A 15-year term carries a lower rate and dramatically less total interest, but a much higher monthly payment. The question is whether the higher payment is comfortable in a bad month, not just an average one. Switch the term in the calculator to see both the payment and the total interest change.

Lenders look at your debt-to-income ratio rather than your salary alone, and commonly cap total monthly debt at around 43% of gross income. Start from your actual take-home pay rather than the gross figure, since federal and state tax and payroll deductions come out first.