5 Easy Steps to Calculate your Mortgage Payment

If you are like millions of other Americans looking to purchase a home, you’ll need to obtain a  mortgage loan. A key part of purchasing a home with a mortgage is calculating how much you can afford to pay for your monthly mortgage payment. Here is a quick and easy guide on what you need to know on how to calculate your mortgage payment  

1. Determine the Principal Loan Amount

The principal loan amount is the base amount of the loan you need to purchase a home. If you are wanting to purchase a home for $300,000 and are able to put down 20%, your principal loan amount would be $240,000. To establish your principal loan amount, you need to consider the price of the home and how much money you’re able to put down in cash.  

2. Loan Interest Rate 

The loan interest rate is the interest that accrues over the life of the loan and is part of your total monthly payment. This can either be a fixed or variable rate. With fixed rates, the interest rate will stay the same over the life of the loan. Your interest rate will not change unless you choose to refinance. With variable rates, your interest rate will adjust over time in response to changes in the market. You can use our Interest rate comparison tool to determine what kind of rate would be best for you.    

3. Length of Loan 

Next, you need to determine the length of the loan and the number of monthly mortgage payments you will make. The most common loan term for a fixed-rate mortgage is 30 years, but people often choose 15 years as well. To calculate monthly mortgage payments, you will multiply the number of years of the loan by 12 months.  For a 30-year mortgage, you will be making 360 monthly payments and with a 15-year mortgage, you will be making 180 monthly payments. You will want to consider your financial situation and goals to decide which loan term option would be best for you.   

4. Other Costs 

Now that we have covered what makes up the mortgage loan itself, we will take a look at the other parts that make up a total monthly mortgage payment. 
  • Private Mortgage Insurance (PMI): If you are not able to put down 20% of the purchase price, you will be required to pay PMI. Typically, your PMI will cost between 0.2% and 2% of the principal loan amount. 
  • Property Taxes: Many people choose to escrow their taxes. This means you pay your lender an additional amount every month to put into an escrow account. Then, your lender will pay out property taxes for you from this account when they come due. You can find the tax history of your property on the county’s website.
  • Homeowners Insurance: If you are purchasing a home you will want to obtain homeowners insurance. As with PMI and property taxes, this amount is added to your monthly mortgage payment. Insurance policies with a high deductible will typically have a lower monthly premium and vice versa. 

5. Use a Mortgage Calculator

Now that you know all of the parts that make up a mortgage, the final step is to use our Mortgage Payment Calculator. With this tool you can quickly and easily calculate your mortgage payment and see what your monthly payment would be and how it fits into your financial goals.

A Lending Hand for Financing Home Mortgages

Spire Financial (A Division of AmeriFirst Financial Inc.) brings lending expertise to you. All of our loan officers offer personalized communication for every client, guiding them through the process. We can show you ways to maximize your finances and unlock future opportunities. Spire Financial keeps you in control of refinancing, debt consolidation, and home equity. Together, we can achieve your financial goals.



Spire Financial, a division of AmeriFirst Financial, Inc., 1550 E. McKellips Road, Suite 117, Mesa, AZ 85203 (NMLS # 145368). 303-595-0110. © 2022. All Rights Reserved. This is not an offer to enter into an agreement. Not all customers will qualify. Information, rates, and programs are subject to change without prior notice. All products are subject to credit and property approval. Not all products are available in all states or for all loan amounts. Other restrictions and limitations apply. AmeriFirst Financial, Inc. is an independent mortgage lender and is not affiliated with the Department of Housing and Urban Development or the Federal Housing Administration. Not intended for legal or financial advice. Visit https://amerifirstloan.com/pages/state-licensing for all state licenses information. Visit NMLS Consumer Access at https://www.nmlsconsumeraccess.org/

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