Mortgage Payment Calculator for Buyers Under Contract

Check it against your Loan Estimate

Your lender had to send a Loan Estimate within three business days of your application, and page 1 shows the projected monthly payment. Put the same price, down payment and rate in above, then open "Taxes, insurance and HOA" and enter the tax and insurance figures from the Estimate's escrow line. If the two payments are more than a few dollars apart, one of three things is different: the rate (an unlocked rate moves every day), the mortgage insurance (the calculator estimates it; the lender prices it on your credit), or the escrow figures. Ask which, in writing, before you lock.

Three business days before closing you will get the Closing Disclosure, the final version of the same numbers. Federal TRID rules require that wait so you can compare it with the Estimate, and an APR that rises by more than an eighth of a point on most loans, a change of loan product, or an added prepayment penalty restarts the three days. What happens between clear to close and the keys.

What moves the payment between offer and closing

• The rate, until it is locked. Move the rate up an eighth of a point and watch the payment: on a $380,000 loan that is roughly $30 a month. A lock holds the rate for a set number of days; if closing slips past it, an extension costs money, usually quoted as a fraction of a point for each extra week. Lock extensions, what they cost and who pays.
• The appraisal. A lender lends against the lower of the price and the appraised value. If a $400,000 home appraises at $385,000, a 95% loan is 95% of $385,000, and the $15,000 difference comes out of your pocket unless the price is renegotiated. Set the home price to the appraised value and the down payment to what you would then have to bring, and you see the payment and the cash that gap really costs. Your options when the appraisal comes in low.
• Mortgage insurance. Under 20% down on a conventional loan, the calculator adds private mortgage insurance at 0.75% of the loan a year; your real premium can be well under or well over that depending on your score and down payment. Under the Homeowners Protection Act you can ask to cancel it at 80% of the original value, and the lender must drop it at 78%. FHA works differently: a 1.75% upfront premium added to the loan plus an annual premium that, with less than 10% down, lasts the life of the loan.
• Escrow. The tax figure here is 1.1% of the price a year, near the national median; the real bill is on the county assessor's site or the listing. Insurance defaults to $1,500 a year and your quote belongs here as soon as you have it, because the lender needs the policy in place before closing anyway.

The number the underwriter checks

Underwriting does not ask whether you can afford the payment; it recomputes your debt-to-income ratio from verified documents. Take the calculator's total, add every monthly debt on your credit report (car, student loans, card minimums), and divide by your gross monthly income as the lender verified it, not as you estimated it at pre-approval. Conventional loans generally allow up to 45%, and up to 50% with strong credit and reserves through automated underwriting; FHA can go higher with compensating factors. A new car payment or a lower income figure after verification is the most common way a pre-approved file stops fitting. Why loans get denied after pre-approval, and what not to do until you have the keys.

Cash to close

What you wire before closing is the down payment plus closing costs, less any earnest money already deposited and any credits from the seller or lender. Closing costs typically run 2% to 5% of the price: lender fees, title and settlement, the appraisal, recording, and prepaid interest, taxes and insurance to start the escrow account. The Closing Disclosure's page 3 has the exact figure. Confirm wiring instructions by phone with your title or escrow company at a number you already have, never one in an email: wire fraud aimed at buyers in closing week is common and the money is rarely recovered.

If your file is slow, your rate is not locked, or the numbers here do not match what you were quoted, "See what rate you qualify for" sends the loan you priced to a licensed lender in your state, who comes back with a real quote. The whole process, offer to closing, day by day.