Question 1

How is my monthly mortgage payment calculated?

Accepted Answer

Your monthly mortgage payment is calculated using the loan amount, interest rate, and loan term. The formula uses amortization to determine principal and interest. Additional costs like property tax, homeowners insurance, PMI, and HOA fees are added to get your total monthly payment.

Question 2

What is PMI and when do I need it?

Accepted Answer

PMI (Private Mortgage Insurance) is required when your down payment is less than 20% of the home's value. It protects the lender if you default. PMI typically costs 0.5-1% of the loan amount annually and can be removed once you reach 20% equity.

Question 3

How much down payment do I need for a mortgage?

Accepted Answer

Conventional loans typically require 3-20% down. FHA loans allow as little as 3.5% down. A larger down payment (20%+) eliminates PMI and reduces your monthly payment. Use this calculator to compare different down payment scenarios.

Question 4

Should I choose a 15-year or 30-year mortgage?

Accepted Answer

A 15-year mortgage has higher monthly payments but lower total interest. A 30-year mortgage has lower monthly payments but more total interest paid. This calculator helps you compare both options to find what fits your budget.

Question 5

What costs are included in my total monthly payment?

Accepted Answer

Your total monthly payment includes: Principal & Interest (the loan itself), Property Tax (annual tax divided by 12), Homeowners Insurance (annual premium divided by 12), PMI (if applicable), and HOA fees (if applicable). This is often called PITI - Principal, Interest, Taxes, Insurance.