Question 1

How is a monthly mortgage payment calculated?

Accepted Answer

Monthly payment = [P × r(1+r)^n] / [(1+r)^n – 1], where P is the loan principal, r is the monthly interest rate, and n is the number of payments.

Question 2

What is included in a mortgage payment?

Accepted Answer

A basic mortgage payment covers principal and interest. Your actual payment may also include property taxes, homeowners insurance, and PMI if your down payment is less than 20%.

Question 3

How does a 15-year vs 30-year mortgage compare?

Accepted Answer

A 15-year mortgage has higher monthly payments but you pay significantly less total interest. A 30-year mortgage lowers your monthly payment but costs more overall in interest.

Question 4

What is a down payment and how does it affect my mortgage?

Accepted Answer

A down payment is an upfront amount you pay toward the home purchase price. A larger down payment reduces your loan amount, lowers monthly payments, and can help you avoid PMI.

Question 5

What interest rate should I use in the calculator?

Accepted Answer

Use the annual percentage rate (APR) quoted by your lender. Rates vary based on credit score, loan type, and market conditions. Current rates are typically between 6% and 8%.

Question 6

What is amortization?

Accepted Answer

Amortization is the process of paying off your loan through regular payments over time. Early payments are mostly interest; later payments apply more toward the principal.

Question 7

How much house can I afford?

Accepted Answer

A common rule: your monthly mortgage payment should not exceed 28% of your gross monthly income. Use this calculator to estimate payments at different price points.

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