Our home mortgage calculator creates a monthly payment scenario for you. We use the information you provide about the property and your mortgage, the loan used to buy a home, to estimate the cost of a monthly payment.

Components of Monarch’s mortgage calculator:

• Home price: The asking price of the home or property you’re interested in. This price is usually determined by realtors after assessing market data, economic factors, property conditions, the seller’s goals, and more.
• Down payment: The amount of money, usually a percentage of the home price, that you pay for your home upfront. A mortgage will finance the remaining amount owed on your balance. Mortgage loan options can require as little as 3% to 5%. But according to Fannie Mae, a down payment of 10% or 20% can save you money in the long run by making your monthly mortgage payments smaller.
• Interest rate: The amount you pay your lender for borrowing money on top of your principal.
• Property tax: The cost paid by the property owner based on the assessed value of the property. Property taxes vary depending on where you live, even from neighboring town to town.
• Mortgage type: The full term of your mortgage loan. There are 15-year mortgage types and 30-year mortgage types.
  • 15-year mortgages typically have higher monthly payments. While this makes upfront costs higher, you’re likely to pay off your mortgage faster and pay less interest over the life of the loan.
  • 30-year mortgages typically have lower monthly payments. This can make a mortgage more affordable in the near term. However, it will take longer to pay off your mortgage and you will pay more in interest over the life of the loan.

You can find more under the Advanced tab:

• Annual home insurance: The amount you pay to protect your home against property damage and loss. Some mortgages include private mortgage insurance (PMI), which is usually applied to down payments less than 20%.
• Monthly HOA fees: It stands for Home Owners Association fees. This is a monthly cost collected by the organization that manages the rules and maintenance of certain property types. HOA fees can range from a few hundred dollars to thousands of dollars a month. Most often, HOA fees are associated with condos, apartments, and planned communities. These are typically not included in your mortgage payment.

How to read your monthly mortgage payment estimate

Your mortgage payment estimate includes three sections: your Monthly Payment, your Monthly Payment Breakdown, and your Recommended Annual Income.

Your Monthly Payment: How much will my mortgage cost?

This is the total amount your mortgage will cost you each month. This number is calculated with the mortgage payment formula:

M = P · [ r(1 + r)ⁿ / ((1 + r)ⁿ − 1) ]

M = total monthly payment

P = Principal loan amount

r = monthly interest

n = number of payments over your loan’s lifetime

If this number is too high, try making adjustments to your original entry. Enter a lower home price or a higher down payment to see the biggest changes.

Your Monthly Payment Breakdown: What costs are included in a mortgage payment?

Monthly mortgage payments don’t only cover the cost of your home. They include four parts: Principal, Interest, Taxes, and Insurance. You’ll often see it abbreviated as PITI.

• Principal: The amount you pay toward the balance you owe on your home.
• Interest: The amount you pay your lender for borrowing money on top of your principal.
• Taxes: It refers to property taxes. It is the cost paid by the property owner based on the assessed value of the property. Property taxes vary depending on where you live, even from neighboring town to town.
• Insurance: The amount you pay to protect your home against property damage and loss. Some mortgages include private mortgage insurance (PMI), which is usually applied to down payments less than 20%.

Each amount is listed and color coded on your monthly mortgage payment estimate so you can easily view each cost.

Your Recommended Annual Income: How much house can I afford?

Your mortgage payment estimate also shows a recommended annual income amount. This is the gut-check moment for most homebuyers. It tells you at-a-glance how much you need to make annually—before taxes and without additional debts—to put yourself in the best position to qualify for a mortgage.

Lenders typically weigh two factors to determine whether you’re a good candidate for a mortgage loan. Your credit score and debt-to-income ratio show lenders how well you can manage your financial obligations.

• Credit score: Your credit score is a numerical representation of your credit history and behavior. There’s no exact formula to calculate your score, and a number of factors, both within and outside of your control, go into determining your score.
  The higher your credit score, the more qualified you may be. Generally, lenders consider 620 to be an adequate credit score for conventional mortgages.
  
• Debt-to-income ratio (DTI): Your DTI is your total monthly debt payments divided by your total monthly gross income. This number is multiplied to get a percentage. Your credit score can impact your DTI.
  The lower your DTI, the more qualified you may be. At Monarch, we consider 30% to be a healthy DTI.

Having debt (like most Americans do) doesn’t mean you can’t qualify for a mortgage. But if your DTI is high, it may be more of a struggle. Buying a house could be the motivation you need to take control of your debts. To make financial moments like this feel less overwhelming, Monarch’s debt paydown calculator can create a realistic debt payoff plan for you. Enter up to six different debts, and we’ll tell you which to prioritize.

Our mortgage calculator creates monthly payments and recommended income estimates that you can immediately compare to your situation. It’s also a reminder that other aspects of your financial life can greatly impact your eligibility to qualify for a mortgage, and vice versa. To feel certain that buying a home is the right decision for you, you need a holistic view of your finances.

Monarch helps solo homebuyers and couples plan to buy a property and fit those expenses into your budget. By bringing all your accounts into one clear view (yes, even your partner’s accounts), you can see your true cash flow and know for certain how much you can reasonably spend on monthly mortgage payments.

1. Turn your home-buying plan into an actionable goal: Monarch auto-calculates exact monthly contributions for all of your financial goals, including buying a home. We track your true cash flow and budget so you know exactly how much you can reasonably spend on your monthly mortgage.
2. Plan with a partner: Contribute toward homebuying goals together in Monarch, even if you keep your money in separate accounts. Collaborate on a budget that gives you both the flexibility to spend on what's important to you.
3. Stress-test affordability against your budget: We use real-time data from all of your accounts to create a manageable budget that includes monthly mortgage payments. Unsurface spending trends to see where you may be able to cut back to make room for higher payments.
4. Stay focused on your progress across all priorities: Monarch shows you the impact buying a house will have on other important goals including retirement savings, kids’ college funds, or debt payoff. You can adjust your priorities any time—leave it to us to recalculate your timelines and status. You’ll always see whether you’re On track, Ahead of track, or At risk—you don’t have to guess.
5. Compare tradeoffs with Monarch’s AI assistant: Monarch’s Assistant learned from a credentialed panel of financial pros to respond with guidance tailored to your actual financial picture. It’s available to help you to think through what kind of house you can afford and how you might go about planning for buying one.
6. Make monthly check-ins a breeze: Interactive reports and monthly summaries help you keep up with the sprinter’s pace of organizing your finances to buy a home. If you’re planning with your partner, you can tag them to review transactions and be sure everything looks right and feel confident you're on track for the mortgage you want.

What is the principal of a loan?
The principal is the amount you pay toward the balance you owe on your home. It’s one of four parts that make up a typical mortgage payment, along with interest, taxes, and insurance. These four parts are often referred to as PITI.

What is a down payment?
A down payment is the amount of money, usually a percentage of the home price, that you pay for your home upfront. This refers to your “cash in hand,” while a mortgage will finance the remaining amount owed on your balance.

How much of a down payment do you need?
Mortgage loan options can require as little as 3% to 5%. But according to Fannie Mae, a down payment of 10% or 20% can save you money in the long run by making your monthly mortgage payments smaller. Down payments under 20% require private mortgage insurance (PMI), which is an additional monthly cost.

How do mortgage lenders determine how much home you can afford?
Lenders typically weigh two factors to determine whether you’re a good candidate for a mortgage loan. Your credit score and debt-to-income ratio (DTI) show lenders how well you can manage your financial obligations. The higher your credit score, the more qualified you may be. Generally, lenders consider 620 to be an adequate credit score for conventional mortgages. The lower your DTI, the more qualified you may be. At Monarch, we consider 30% to be a healthy DTI.