Mortgage Calculator: Home Loan Payments, Taxes & More

residents estimate monthly payments and other costs related to home loans. You can include extra payments or annual increases for expenses like taxes and insurance for a more accurate estimate. What is a Mortgage? A mortgage is a loan used to buy real estate, with the property itself as collateral. The buyer makes monthly payments to the lender, which cover both the principal (the amount borrowed) and interest (the cost of borrowing). Most U.S. mortgages are 15 or 30-year fixed-rate loans, with the 30-year option being the most common. Key Mortgage Components Loan Amount: The amount borrowed, usually the home price minus the down payment. Down Payment: The upfront portion paid by the buyer, often 20% of the home price. Less than 20% usually requires private mortgage insurance (PMI). Loan Term: The length of time to repay the loan, typically 15, 20, or 30 years. Interest Rate: The cost of borrowing, usually fixed for the loan term. Other Homeownership Costs Property Taxes: Annual taxes paid to local governments, averaging about 1.1% of property value. Home Insurance: Protects against property damage and liability. PMI: Required if the down payment is less than 20%. HOA Fees: Fees for homeowners’ associations, common in condos and some neighborhoods. Other Costs: Utilities, maintenance, and repairs. Extra Payments & Early Repayment Making extra payments can reduce interest costs and shorten the loan term. Options include monthly or annual extra payments, biweekly payments, or refinancing to a shorter term. However, consider possible prepayment penalties, opportunity costs, and the impact on tax deductions. A Brief History In the early 20th century, homebuyers needed large down payments and short-term loans. Government programs like the FHA and Fannie Mae, created in the 1930s, made homeownership more accessible by introducing longer-term, lower-down-payment mortgages. These programs continue to support the U.S. housing market today.