# Mortgage Calculator Use our mortgage calculator to estimate your monthly payment. Enter the home price, your down payment, and a few details about the property and loan terms to see a breakdown of your estimated payment, plus a recommended annual income to compare with your own. ### Mortgage Calculator - **Home price** - **Down payment** - **Interest rate** - **Property taxes** - **Mortgage type:** 30-year fixed ### $4,704 Monthly Payment ### Monthly Payment Breakdown - **Principal & Interest:** $3,837 - **Property Taxes:** $667 - **Home Insurance:** $200 - **HOA Fees:** $0 ### Recommended Annual Income $188,152 or more This is the annual income you need to make before taxes to maintain a healthy debt-to-income ratio of 30%, assuming you have no other debt payments. ## How Monarch’s mortgage calculator works Our home mortgage calculator creates a monthly payment scenario for you. We use the information you provide about the property and your mortgage, the loan used to buy a home, to estimate the cost of a monthly payment. ### Components of Monarch’s mortgage calculator: - **Home price:** The asking price of the home or property you’re interested in. This price is usually [determined by realtors](https://www.nar.realtor/determining-asking-price) after assessing market data, economic factors, property conditions, the seller’s goals, and more. - **Down payment:** The amount of money, usually a percentage of the home price, that you pay for your home upfront. A mortgage will finance the remaining amount owed on your balance. Mortgage loan options can require as little as 3% to 5%. But according to [Fannie Mae](https://yourhome.fanniemae.com/buy/homebuyer-down-payment), a down payment of 10% or 20% can save you money in the long run by making your monthly mortgage payments smaller. - **Interest rate:** The amount you pay your lender for borrowing money on top of your principal. - **Property tax:** The cost paid by the property owner based on the assessed value of the property. Property taxes vary depending on where you live, even from neighboring town to town. - **Mortgage type:** The full term of your mortgage loan. There are 15-year mortgage types and 30-year mortgage types. - **15-year mortgages** typically have higher monthly payments. While this makes upfront costs higher, you’re likely to pay off your mortgage faster and pay less interest over the life of the loan. - **30-year mortgages** typically have lower monthly payments. This can make a mortgage more affordable in the near term. However, it will take longer to pay off your mortgage and you will pay more in interest over the life of the loan. You can find more under the Advanced tab: - **Annual home insurance:** The amount you pay to protect your home against [property damage and loss](https://www.consumerfinance.gov/owning-a-home/close/shop-for-homeowners-insurance/). Some mortgages include private mortgage insurance (PMI), which is usually applied to down payments less than 20%. - **Monthly HOA fees:** It stands for Home Owners Association fees. This is a monthly cost collected by the organization that manages the rules and maintenance of certain property types. HOA fees can range from a few hundred dollars to thousands of dollars a month. Most often, HOA fees are associated with condos, apartments, and planned communities. ### How to read your monthly mortgage payment estimate Your mortgage payment estimate includes three sections: your Monthly Payment, your Monthly Payment Breakdown, and your Recommended Annual Income. #### Your Monthly Payment: How much will my mortgage cost? This is the total amount your mortgage will cost you each month. This number is calculated with the mortgage payment formula: **M = P · \[ r(1 + r)ⁿ / ((1 + r)ⁿ − 1) \]** **M** = total monthly payment **P** = Principal loan amount **r** = monthly interest **n** = number of payments over your loan’s lifetime If this number is too high, try making adjustments to your original entry. Enter a lower home price or a higher down payment to see the biggest changes. #### Your Monthly Payment Breakdown: What costs are included in a mortgage payment? Monthly mortgage payments [don’t only cover the cost of your home](https://www.consumerfinance.gov/owning-a-home/what-are-all-costs-buying-home/). They include four parts: Principal, Interest, Taxes, and Insurance. You’ll often see it abbreviated as PITI. - **Principal:** The amount you pay toward the balance you owe on your home. - **Interest:** The amount you pay your lender for borrowing money on top of your principal. - **Taxes:** Property taxes paid by the property owner based on the assessed value of the property. - **Insurance:** The amount you pay to protect your home against property damage and loss. Some mortgages include private mortgage insurance (PMI). #### Your Recommended Annual Income: How much house can I afford? Your mortgage payment estimate also shows a recommended annual income amount. It tells you how much you need to make annually— _before_ taxes and _without_ additional debts—to qualify for a mortgage. Lenders weigh two factors to determine whether you’re a good candidate for a mortgage loan: - **Credit score:** A numerical representation of your credit history; generally, lenders consider 620 to be an adequate score for conventional mortgages. - **Debt-to-income ratio (DTI):** Your total monthly debt payments divided by your total monthly gross income. At Monarch, we consider 30% to be a healthy DTI. ## How to pay off debt to buy a house Having debt doesn’t mean you can’t qualify for a mortgage. Buying a house can motivate you to take control of your debts. Monarch’s debt paydown calculator can create a realistic payoff plan for you. ## Monarch can give you mortgage clarity Our mortgage calculator creates monthly payments and recommended income estimates for comparison to your situation. It’s a reminder that other aspects of your financial life can greatly impact your mortgage eligibility. Monarch helps solo homebuyers and couples plan to buy a property and understand their expenses. 1. **Turn your home-buying plan into an actionable goal** 2. **Plan with a partner** 3. **Stress-test affordability against your budget** 4. **Stay focused on your progress across all priorities** 5. **Compare tradeoffs with Monarch’s AI assistant** 6. **Make monthly check-ins a breeze** ## FAQs **What is the principal of a loan?** The amount you pay toward the balance owed on your home, part of the mortgage payment. **What is a down payment?** The amount of money that you pay for your home upfront, usually a percentage of the home price. **How much of a down payment do you need?** Options can require as little as 3% to 5%. Lenders often recommend 10% to 20% for savings on monthly payments. **How do mortgage lenders determine how much home you can afford?** They consider your credit score and debt-to-income ratio (DTI). The higher the credit score and the lower the DTI, the more qualified you may be.