The typical rule of thumb is to pay 20 percent of the home's price as your down payment, although some mortgage loans require as little as 3.5 percent down. Your down payment reduces the total amount of your mortgage loan, so the more money you put down, the lower your payments will be - or the more expensive a house you can buy.
Your loan term can affect your interest rate and monthly payments. Choose the term of your loan in years in the calculator.
There are several types of mortgage loans, but the most commonly used are fixed-rate and adjustable-rate loans.
Fixed-rate loans have the same interest rate for the entire duration of the loan. That means your monthly payment will be the same, even for long-term loans, such as 30-year fixed-rate mortgages. A 30-year fixed-rate mortgage lowers your monthly payment, but you’ll pay more interest over the life of the loan. A 15-year fixed-rate mortgage reduces the total interest you'll pay, but your monthly payment will be higher. Two benefits to this loan type are stability, and being able to calculate your total interest up front.
Adjustable-rate mortgages (ARMs) have interest rates that can change over time. Typically they start out at a lower interest rate than a fixed-rate loan, and hold that rate for a set number of years, before changing interest rates from year to year. For example, if you have a 5/1 ARM, you will have the same interest rate for the first 5 years, and then your interest rate will change from year to year. The main benefit of an adjustable-rate loan is starting off with a lower interest rate, which can be a good choice if you plan to be in the home for just a few years. You’ll want to be aware of how much your monthly mortgage payment can change when the introductory rate expires, especially if interest rates are trending higher.
Your actual rate will vary based on factors like credit score and down payment.
Property Tax Rate
The annual tax assessed by a government authority on your home and land. You pay about one-twelfth of your annual tax bill with each mortgage payment, and the servicer saves them in an escrow account. When the taxes are due, the loan servicer pays them.
Home insurance is typically required by lenders, depending on the loan program. Your policy covers damage and financial losses from fire, storms, theft, and other bad things. As with property taxes, you pay roughly one-twelfth of your annual premium each month, and the servicer pays the bill when it's due.
A homeowners association fee (HOA fee) is an amount of money that must be paid monthly by owners of certain types of residential properties, and HOAs collect these fees to assist with maintaining and improving properties in the association. Typically, when you belong to a homeowners association, the dues are billed directly, and it's not added to the monthly mortgage payment.