How to use the mortgage calculator?

• Before you start, have these key pieces of information ready (even if some are estimates):

House Price: The purchase price of the home you're considering.

Down Payment: The amount of money you plan to pay upfront. You can enter this as a fixed dollar amount or as a percentage of the home price. The calculator will subtract this from the Home Price to determine the Loan Amount. (Some calculators let you enter the Loan Amount directly instead).

Interest Rate: The estimated annual interest rate for the loan. This is crucial. Look up current average rates or get a quote from a lender for a more accurate estimate. Remember this can significantly impact your payment.

Loan Term (# of Years): The length of the mortgage, typically 15 or 30 years.

(Optional but Recommended) Property Taxes: The estimated annual property taxes for the home. You can often find this on real estate listings or county websites. Calculators usually ask for an annual amount or a percentage of the home value.

(Optional but Recommended) Homeowners Insurance: The estimated annual cost of homeowners insurance. You might need to get quotes or use a local average.

(Optional) Private Mortgage Insurance (PMI): If your down payment is less than 20% of the home price, lenders typically require PMI. Some calculators estimate this automatically, while others allow you to enter an estimated annual rate (often 0.5% to 1% of the loan amount per year).

(Optional) HOA Fees: If the property is part of a Homeowners Association, include the monthly or annual HOA fees.

• Enter the Information: Input the figures you gathered into the corresponding fields on the calculator.

• Calculate: Click the "Calculate" button and then review the results.

What is the difference between FHA, VA, USDA, Conventional?

• FHA Loans (Federal Housing Administration)

Backing: Insured by the Federal Housing Administration (part of HUD). This insurance protects the lender if the borrower defaults.

Eligibility: Designed for borrowers with lower-to-moderate incomes and those with less-than-perfect credit. Minimum credit scores are lower than conventional (often 580 for minimum down payment, potentially 500-579 with 10% down, though lender requirements may be higher).

Down Payment: Requires a minimum down payment of 3.5% (if credit score is 580+).

Mortgage Insurance: Requires Mortgage Insurance Premium (MIP) regardless of the down payment amount.

Loan Limits: FHA sets loan limits that vary by county based on local housing costs.

Property Types: Generally for primary residences only. Must meet FHA minimum property standards (appraisal includes a property condition check).

• VA Loans (Department of Veterans Affairs)

Backing: Partially guaranteed by the U.S. Department of Veterans Affairs. This guarantee protects the lender.

Eligibility: Restricted to eligible active-duty military personnel, veterans, reservists/National Guard members, and some surviving spouses. Requires a Certificate of Eligibility (COE).

Down Payment: Typically requires no down payment (0% down).

Mortgage Insurance: Does not require ongoing monthly mortgage insurance.

Funding Fee: Requires an upfront VA Funding Fee (a percentage of the loan amount) unless the borrower is exempt (e.g., veterans with service-connected disabilities). This fee varies based on service type, down payment amount, and whether it's a first-time or subsequent use. It can often be rolled into the loan.

Credit Score: No official minimum set by the VA, but lenders usually impose their own minimums (often lower than conventional).

Loan Limits: For borrowers with full entitlement, there's no VA loan limit, but lenders will limit the loan based on the borrower's ability to repay and the home's value.

Property Types: Generally for primary residences only. Must meet VA Minimum Property Requirements (MPRs).

• USDA Loans (U.S. Department of Agriculture)

Backing: Guaranteed by the U.S. Department of Agriculture Rural Development.

Eligibility: Designed for low-to-moderate income borrowers purchasing homes in eligible rural and some suburban areas. There are specific income limits based on household size and location, and the property must be located in a USDA-eligible area (check USDA maps).

Down Payment: Typically requires no down payment (0% down).

Mortgage Insurance: Requires two forms of mortgage insurance. An Upfront Guarantee Fee paid at closing (can often be rolled into the loan). An Annual Fee paid monthly for the life of the loan (typically lower rates than FHA MIP or PMI).

Credit Score: No official minimum set by the USDA, but lenders usually require scores of 640+ for streamlined processing (lower scores may require manual underwriting).

Loan Limits: No set loan limit, but borrowing power is constrained by income limits and ability to repay.

Property Types: For primary residences only, located in USDA-eligible geographic areas.

• Conventional Loans

Backing: Not insured or guaranteed by the federal government. They are offered by private lenders (banks, credit unions, mortgage companies) and often sold to government-sponsored enterprises like Fannie Mae and Freddie Mac if they meet "conforming" guidelines.

Eligibility: Generally requires stronger credit scores (often 620 minimum, but better rates require higher scores) and a lower debt-to-income ratio compared to government-backed loans. Open to most borrowers who qualify financially.

Down Payment: Can be as low as 3% for some programs, but typically requires at least 5%. A down payment of 20% or more is required to avoid Private Mortgage Insurance (PMI).

Mortgage Insurance: Requires Private Mortgage Insurance (PMI) if the down payment is less than 20%. PMI typically can be canceled once the borrower reaches about 20-22% equity in the home.

Loan Limits: Conforming loan limits apply (set annually by the FHFA, varying by location). Loans above these limits are called "jumbo" loans and may have different requirements.

Property Types: Can be used for primary residences, second homes, and investment properties.