The Ascent's mortgage calculator helps you understand how much a home loan will cost. It also makes it easy to compare loan options. To use the calculator, plug in the following numbers:
You can also put in the cost of home insurance, property taxes, and homeowners association (HOA) fees, if you know them. This will provide a more accurate estimate.
Our mortgage calculator can help you make informed decisions about your loan, including:
If you get quotes from different mortgage or refinance lenders, you can also use the calculator to see how much each loan costs.
To qualify for a mortgage or refinance lender, shop around with several lenders. When you find one offering the best rates and terms, make sure you meet its qualifying requirements. These relate to your income, debt, and credit score.
You will need to provide information on your finances, so gather documents such as pay stubs and bank statements. Once you've found the right loan and have your paperwork ready, submit an application. For more information, or if you're ready to go, use our form to help guide you through the process to get a mortgage pre-approval.
Yes. Most lenders look at your credit report and score when determining if you can qualify for a home loan. However, some lenders will work with borrowers who don't have a credit history. They can review other documentation, such as utility statements, showing you have a history of making on-time payments.
You will need to shop around for a lender that does manual underwriting and prepare financial documentation such as bank statements to get approved. Find out more in this guide on how to buy a house with no credit.
The amount you can afford to spend on a house depends on many factors. Your down payment is important. A larger down payment means you generally can afford a home that's more expensive. Your credit score, income, and other debt also affect what you can borrow. However, you may not want to borrow the maximum allowed.
Generally, experts recommend you keep housing costs below 30% of your income. This includes your mortgage, utilities, HOA fees, insurance, taxes, and other costs. Staying below this threshold ensures mortgage payments won't compromise other financial goals. You can also find out other details to consider in our guide to figuring out how much house you can afford.
Your monthly mortgage payment includes:
The type of mortgage you should choose depends on many factors, including your credit history, your down payment amount, the type of house you're buying, and your goals for your loan. For example, you may wish to choose a:
These are just a few examples of different home loans. Make sure to research all the available mortgage types before you decide.
Getting pre-qualified for a mortgage involves submitting a small amount of financial information to find out what your mortgage loan terms would likely be. It's a quick process that shouldn't affect your credit score.
Getting pre-approved involves submitting a large amount of financial information. Lenders commit to providing a loan if your financial situation doesn't change and the home you want to purchase meets their criteria. Pre-approval is usually required by home sellers when you make an offer, and it's a much more involved process.
Learn more about the difference between mortgage pre-qualification vs. pre-approval before shopping for a home.
To begin the process of buying a home, you'll need to set a budget and ensure you're financially prepared to qualify for a home loan and pay a mortgage. You should prepare the financial documents that mortgage lenders will want to review. Get quotes from several lenders and pursue mortgage pre-approval from the one offering the best terms.
You may want to hire a real estate agent to help you shop for properties. When you find a home that fits your budget and criteria, make an offer. Be sure to include contingencies or conditions that must be met, such as a satisfactory inspection. Complete the formal loan approval process for the mortgage loan that best fits your needs and close on your transaction.
This home-buyer checklist provides more insight into each of these steps, so check it out before you start shopping for a property.
Ideally, you will make a down payment that is equal to 20% of the value of the property. So if you're buying a $200,000 home, save $40,000.
However, many people don't save this much for a down payment. You could potentially qualify for a conventional loan (not backed by the government) with as little as 3% down. Some government-backed loans don't require a down payment at all. But if you don't make a down payment or you make a small one, you can expect to pay mortgage insurance or other upfront fees.
Whether you plan to save 20% or not, be sure to look into how to save for a down payment.
To apply for a mortgage, you will need:
Lenders may also request additional information, so be sure to read up on what documents are required for home loans.
Expenses of homeownership to prepare for include:
You can learn more about these costs in this guide to homeownership expenses.
A 15-year mortgage is a home loan that's paid off in half the time of a 30-year loan. With a 15-year loan, you make payments for just 15 years as opposed to 30 years.
The monthly amount you owe is higher on a 15-year loan than a 30-year loan because you make fewer payments. The interest rate is usually lower on a 15-year loan, though. And total interest costs are lower because you pay interest for less time.
Carefully consider the pros and cons of a 15- vs. 30-year mortgage when you decide which is right for you.
Some of the best tips for first-time home buyers include:
For more information, look at our first-time home-buyer tips.
Lenders consider your debt-to-income ratio when you apply for a mortgage because they want to make sure you can afford mortgage payments. They look at your:
If either ratio is too high, you won't be approved for your loan. For more information about lender requirements, read up on debt-to-income ratio and why it matters.
A higher credit score can result in a lower mortgage rate. That's because lenders will view you as a low-risk borrower. A lower mortgage rate means lower monthly payments and less total interest paid over time.
A credit score on the low end can make it difficult to get approved for a loan. And lenders that do agree to provide a mortgage will charge a higher rate. That's because your past credit problems suggest there's a greater chance you'll default on your loan.
Find out more about this impact by looking into how credit scores affect mortgage rates.
If you want to uncover more about the best mortgage lenders for low rates and fees, our experts have created a shortlist of the top mortgage companies. Some of our experts have even used these lenders themselves to cut their costs.
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