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 with the standard amortization formula. The total monthly cost also includes property taxes (estimated at ~1.1% of home value annually), homeowners insurance (~0.35% annually), and PMI if your down payment is less than 20%.

Question 2

What is PMI and when do I need it?

Accepted Answer

Private Mortgage Insurance (PMI) is required when your down payment is less than 20% of the home price. PMI typically costs 0.5%–1% of the loan amount per year and is added to your monthly payment. Once you reach 20% equity, you can request to remove PMI.

Question 3

How much house can I afford on my salary?

Accepted Answer

A common guideline is that your total monthly housing cost (mortgage, taxes, insurance) should not exceed 28% of your gross monthly income. For example, on a $100,000 salary, you'd aim for a maximum housing payment of about $2,333/month.

Question 4

What's the difference between a 15-year and 30-year mortgage?

Accepted Answer

A 15-year mortgage has higher monthly payments but significantly lower total interest paid over the life of the loan. A 30-year mortgage has lower monthly payments, making it more affordable month-to-month, but you'll pay more in interest overall. Use the calculator to compare both options.

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