Mortgage Calculator

See the full cost — not just the payment.

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See your actual buying power.
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The Financial Blueprint & US Mortgage Guide

Real estate is not just about a monthly payment. It is the intersection of debt, liquidity, and asset performance. Most calculators only show you the "price." This tool shows you the "cost"—bridging the gap between affordability and wealth modeling in the American housing market.

Financial Solvency & Readiness

Buying a home is often the largest leveraged transaction of your life. The question isn't just "Can I make the payment?" but "Can I survive the shock?"

  • Liquidity vs. Income: Banks lend based on income (DTI), but you pay bills with cash. Prioritize your Cash to Close to avoid being "house poor."
  • The Burn Rate: In the early years of a 30-year fixed loan, nearly 70% of your payment is interest, property taxes, and insurance. This is money you never get back.
  • Stress Testing: Financial advisors recommend maintaining a post-closing liquidity buffer of at least 6 months of reserves.

The Mathematics of Refinancing

Refinancing is an arbitrage play. You are trading one debt instrument for another to lower your "Cost of Capital" without overpaying in fees.

  • The Breakeven Horizon: A lower rate is meaningless if you move before recovering closing costs. Calculate the exact date your savings turn into profit.
  • Opportunity Cost: Every dollar spent on closing costs is a dollar not invested in the market. Weigh guaranteed savings against potential market returns.
  • Cash-Out Strategy: Extracting equity to pay off high-interest debt leverages the spread between mortgage rates and unsecured debt.

Asset Performance & Cash Flow

When you buy a rental property, you are buying a business. The metrics for a home (emotion) are different from the metrics for an asset (math).

  • DSCR (Debt Service Coverage Ratio): Measures if the property's income covers its debt. A DSCR under 1.0 is insolvent; over 1.25 is healthy.
  • The Leverage Multiplier: Real estate allows you to control a large asset with a small down payment. This magnifies returns—and risks.
  • Payment Shock: Interest-Only loans maximize cash flow initially, but when the IO period ends, payments can spike 40-60%.

Government Programs & Liquidity

Access to capital is the biggest barrier. Government-backed loans (FHA/VA) lower this barrier, often at the cost of higher fees.

  • Liquidity Preservation: VA/FHA loans allow 0-3.5% down. While APR is higher due to Mortgage Insurance, keeping cash for emergencies is a strategic advantage.
  • The Sunk Cost of Leverage: Funding Fees are often financed, increasing your LTV. Understanding this trade-off is key to smart leverage.
  • FHA vs Conventional: FHA loans are more lenient on credit scores but require permanent mortgage insurance (MIP) if you put less than 10% down.

Banking & Credit Secrets

Understanding how US banks view your profile is key to securing the best mortgage rates.

  • Credit Utilization: Keep credit card balances under 30% of the limit to boost your FICO score before applying.
  • Debt-to-Income (DTI): This is the ratio of your monthly debt payments to your gross income. A lower DTI unlocks better interest rates.
  • Seasoning of Funds: Banks want to see that your down payment has been in your account for at least 60 days to prevent money laundering.

Mortgage 101: Key Components

Every US monthly mortgage payment generally consists of four parts, often referred to as PITI.

  • Principal: The portion of the payment that reduces the loan balance.
  • Interest: The cost of borrowing money, paid to the lender.
  • Taxes: Property taxes paid to the local government, often held in escrow.
  • Insurance: Homeowners insurance to protect the asset against damage.

Mortgage & Finance Dictionary

APR (Annual Percentage Rate)

The true annual cost of borrowing, including the interest rate plus fees and closing costs.

Amortization

The process of paying off a debt over time through regular payments of principal and interest.

Escrow

A third-party account that holds funds for property taxes and insurance to ensure they are paid on time.

LTV (Loan-to-Value)

A ratio comparing the amount of your loan to the appraised value of the home.

PMI (Private Mortgage Insurance)

Insurance required by lenders if your down payment is less than 20% on a conventional loan.

Closing Costs

Fees due at the signing of the loan, typically 2-5% of the loan amount, covering title, appraisal, and origination.

Fixed-Rate Mortgage

A loan where the interest rate remains the same for the entire term (e.g., 30 years), offering stability.

HELOC

Home Equity Line of Credit. A revolving credit line secured by the equity in your home.

Common Questions

What is a safe Debt-to-Income (DTI) ratio?

While lenders approve up to 50%, financial prudence suggests keeping total housing expense under 28% of gross income to leave room for savings.

Is it better to put 20% down or pay PMI?

It depends on ROI. If your cash earns a higher return in the market than the cost of PMI, putting less down may be mathematically superior.

When does refinancing make sense?

Only when your cumulative monthly savings exceed the upfront closing costs within the time you plan to stay in the home.

What is the difference between Pre-qualification and Pre-approval?

Pre-qualification is an estimate based on self-reported data. Pre-approval is a verified commitment from a lender based on credit and income documentation, making you a stronger buyer.

Disclaimer: This tool provides estimates for educational purposes only. It does not constitute a loan offer or financial advice. All figures are based on US standard mortgage practices.