KeyRate

Monthly payment = P × [r(1+r)^n] / [(1+r)^n - 1], where P is the loan principal, r is the monthly interest rate (annual rate ÷ 12), and n is the number of payments (loan term in years × 12). This gives you the principal + interest portion. Add property taxes, homeowner's insurance, and PMI to get the full PITI payment.

PMI (Private Mortgage Insurance) is required when your down payment is less than 20% of the home's purchase price. It typically costs 0.5%–1.5% of the loan amount per year. Once your loan-to-value ratio drops below 80% (through payments or appreciation), you can request PMI cancellation.

A standard guideline is the 28/36 rule: your monthly housing costs (PITI) should not exceed 28% of gross monthly income, and total debt payments should not exceed 36%. For a household earning $8,000/month, that's a max PITI of $2,240. Use the Affordability calculator above to get a personalized estimate.

A 30-year mortgage has lower monthly payments but you pay significantly more interest over the life of the loan. A 15-year mortgage has higher monthly payments but typically carries a lower rate and you pay roughly half the total interest. For example, on a $400,000 loan at 7% vs 6.5%, a 30-year costs ~$538K in interest vs ~$210K for 15-year.

Refinancing typically makes sense if you can lower your rate by at least 0.75–1%, you plan to stay in the home long enough to recoup closing costs (usually 2–4 years), and your credit score has improved since the original loan. Use the Refinance calculator to find your break-even point.

An ARM has a fixed rate for an initial period (commonly 5, 7, or 10 years), then adjusts annually based on a benchmark rate plus a margin. A 7/1 ARM is fixed for 7 years, then adjusts every year. ARMs often have lower initial rates but carry the risk of payment increases. Use the ARM vs Fixed calculator to compare.