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Determine what your payment will be based on the interest rate and down payment amount given on your approval letter. You are responsible for figuring out the property taxes and homeowners' insurance being set at 1% of the purchase price divided by 12 for your payment.

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How to calculate a mortgage payment

Under "Home price," enter the price (if you're buying) or the current value (if you're refinancing). NerdWallet also has a refinancing calculator .

Under "Down payment," enter the amount of your down payment (if you're buying) or the amount of equity you have (if refinancing). A down payment is the cash you pay upfront for a home, and home equity is the value of the home, minus what you owe.

On desktop, under "Interest rate" (to the right), enter the rate. Under "Loan term," click the plus and minus signs to adjust the length of the mortgage in years.

On mobile devices, tap "Refine Results" to find the field to enter the rate and use the plus and minus signs to select the "Loan term."

The mortgage calculator lets you click "Compare common loan types" to view a comparison of different loan terms. Click "Amortization" to see how the principal balance, principal paid (equity) and total interest paid change year by year. On mobile devices, scroll down to see "Amortization."

Formula for calculating a mortgage payment

The mortgage payment calculation looks like this: M = P [ i(1 + i)^n ] / [ (1 + i)^n - 1]

The variables are as follows:

How a mortgage calculator helps you

Determining what your monthly house payment will be is an important part of figuring out how much house you can afford. That monthly payment is likely to be the biggest part of your cost of living.

Using NerdWallet's mortgage calculator lets you estimate your mortgage payment when you buy a home or refinance. You can change loan details in the calculator to run scenarios. The calculator can help you decide:

The home loan term length that's right for you. 30-year fixed-rate mortgage lower your monthly payment, but you'll pay more interest over the life of the loan. A 15-year fixed-rate mortgage reduce the total interest you'll pay, but your monthly payment will be higher. c

If an ARM is a good option. Adjustable-rate mortgages start with a "teaser" interest rate, and then the loan rate changes - higher or lower - over time. A can be a good choice, particularly if you plan on being in a 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.

How lenders decide how much you can afford to borrow

Mortgage lenders are required to assess your ability to repay the amount you want to borrow. A lot of factors go into that assessment, and the main one is debt-to-income ratio.

Your debt-to-income ratio is the percentage of pretax income that goes toward monthly debt payments, including the mortgage, car payments, student loans, minimum credit card payments and child support. Lenders look most favorably on debt-to-income ratios of 36% or less - or a maximum of $1,800 a month on an income of $5,000 a month before taxes.

Typical costs included in a mortgage payment

If your mortgage payment included just principal and interest, you could use a bare-bones mortgage calculator. But most mortgage payments include other charges as well. Here are the key components of the monthly mortgage payment:

Mortgage insurance: If your down payment is less than 20% of the home's purchase price, you'll likely pay mortgage insurance . It protects the lender's interest in case a borrower defaults on a mortgage. Once the equity in your property increases to 20%, the mortgage insurance is canceled, unless you have an backed by the Federal Housing Administration.

Typically, when you belong to a homeowners association, the dues are billed directly, and it's not added to the monthly mortgage payment. Because HOA dues can be easy to forget, they're included in NerdWallet's mortgage calculator.

Reducing monthly mortgage payments

The mortgage calculator lets you test scenarios to see how you can reduce the monthly payments:

Monthly mortgage payments can go up

Your monthly payment can go up over time if:

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How to calculate a mortgage payment Under "Home price," enter the price (if you're buying) or the current value (if you're refinancing). NerdWallet also has a refinancing calculator . Under "Down payment," enter the amount of your down payment (if you're buying) or the amount of equity you have (if refinancing).

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Now that you have your house payment, and your budget and expenses, what is left? Using your Budget and Reflection sheet, how are you going to prioritize your weekly expenses? Entertainment? Life? Anything eye opening?

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When finding your home, you want to decide what you can afford. Determine what your needs/wants are and make sure your home is within your approval amount. Even though you got approved for a certain amount, would it be wise to go all the way to that amount considering your monthly expenses?

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You decided trade school or college was not for you. You are working full time at a local retailer making $15.00 and hour and work 40 hours a week.

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You decided college was not for you, but you exceled in your high school engineering class particularly focusing on welding. You just started out as an entry level welder making $22.00 an hour and work 40 hours a week with the opportunity of 10-15 hours overtime.

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