Understanding your US mortgage results
The reference points below are US affordability and cost benchmarks cited by the Consumer Financial Protection Bureau (CFPB) and common conventional-lending practice. They are guidelines, not hard limits.
| Item | US benchmark / convention |
|---|---|
| Housing cost / gross income | ≤ 28% front-end ratio (CFPB 28/36 guideline) |
| Total debt / gross income | ≤ 36% back-end ratio (CFPB 28/36 guideline) |
| Down payment to avoid PMI | 20% of price (80% loan-to-value) on conventional loans |
| Rate benchmark | Freddie Mac PMMS 30-year fixed average (see on-page reference rate) |
| Discount point | 1 point = 1% of loan, paid upfront to lower the rate |
- The calculator excludes property taxes, homeowners insurance, HOA/condo dues and PMI. Together these often add several hundred dollars to the true monthly housing cost.
- Enter the note rate, not the APR. The APR bundles fees, points and certain closing costs and is typically slightly higher than the note rate.
- Freddie Mac's PMMS surveys conventional, conforming, fully amortizing purchase loans for borrowers putting 20% down with strong credit; individual quotes vary with credit score, loan size and points.
- This model covers fixed-rate loans only. ARM payments change after the initial fixed period and are not represented here.
What is a US mortgage calculator?
A US mortgage calculator applies the standard amortization formula to find the fixed monthly principal-and-interest payment on a home loan repaid in equal installments over a set term. The 30-year fixed-rate mortgage is the most common structure in the United States; the 15-year fixed is the main alternative and usually carries a lower rate but a higher monthly payment. Adjustable-rate mortgages (ARMs) exist but represent a minority of purchase loans.
The calculator derives the loan principal from the home price minus the down payment. A down payment below 20% of the price on a conventional loan generally triggers private mortgage insurance (PMI), an added monthly cost that protects the lender and is not modeled here. Government-backed FHA, VA and USDA loans have their own down-payment and insurance rules.
US buyers also pay closing costs at settlement — lender origination fees, appraisal, title insurance, escrow and recording charges — commonly a few percent of the loan amount. Borrowers may pay discount points (each point is 1% of the loan) upfront to buy down the interest rate. This calculator reports the payment only; PMI, taxes, insurance and closing costs must be budgeted separately.
How to use this US mortgage calculator
- Enter the home purchase price and your planned down payment in US dollars. The calculator derives the principal as price minus down payment.
- Enter the annual note interest rate quoted by your lender — the nominal rate on the loan, not the APR, which also includes fees and points.
- Enter the loan term in years. The most common US terms are 30 and 15 years.
- Read the fixed monthly principal-and-interest payment, the total paid over the full term and the total interest cost.
- If your down payment is under 20%, add an estimate for PMI, plus property taxes and homeowners insurance, to gauge the true monthly housing cost.
The amortization formula
The fixed monthly payment M is derived from the present-value annuity formula, which sets the present value of all future payments equal to the loan principal P. The monthly rate r is the annual note rate divided by 12; n is the number of monthly payments (years times 12). When the rate is zero the payment simplifies to principal divided by the number of payments.
Common mistakes
- Treating the principal-and-interest figure as the full housing cost — US buyers also owe property tax, homeowners insurance and often PMI or HOA dues.
- Entering the APR instead of the note rate, which overstates the monthly payment.
- Assuming a sub-20% down payment avoids extra cost; conventional loans below 20% down usually require PMI until the loan reaches 80% loan-to-value.
- Overlooking closing costs and discount points, which are due in cash at settlement and are separate from the down payment.
- Comparing a 30-year and 15-year loan on monthly payment alone, ignoring the far larger total interest paid over 30 years.
Câu hỏi thường gặp
Why is the 30-year fixed mortgage so common in the US?
The 30-year fixed-rate mortgage is the dominant US home loan because it spreads repayment over a long term, keeping monthly payments lower, and locks the interest rate for the full life of the loan so payments never rise. This structure is supported by the US secondary mortgage market, where government-sponsored enterprises such as Freddie Mac and Fannie Mae purchase conforming loans. The 15-year fixed is the main alternative, with a lower rate but a higher monthly payment.
What is PMI and when is it required?
Private mortgage insurance (PMI) is an added monthly charge on conventional US loans when the borrower's down payment is less than 20% of the purchase price. It protects the lender against default, not the borrower. PMI can usually be cancelled once the loan balance falls to 80% of the original value, and it is automatically terminated at 78% under the federal Homeowners Protection Act. This calculator does not include PMI.
What are mortgage discount points?
Discount points are an optional upfront fee paid to the lender to reduce the interest rate on a US mortgage. One point costs 1% of the loan amount and typically lowers the rate by a fraction of a percentage point. Paying points can reduce the monthly payment and total interest, but only benefits borrowers who keep the loan long enough to recoup the upfront cost.
What benchmark do US mortgage rates track?
US 30-year fixed mortgage rates are widely benchmarked against the Freddie Mac Primary Mortgage Market Survey (PMMS), a weekly average of conventional, conforming purchase-loan rates. Actual quoted rates move with the broader bond market — particularly 10-year Treasury yields and mortgage-backed-securities pricing — and vary by credit score, loan size and points. Calculate.Studio shows the current PMMS benchmark separately with its verification date.
What are closing costs on a US home purchase?
Closing costs are the fees paid at settlement to finalize a US mortgage, typically a few percent of the loan amount. They include lender origination and underwriting fees, appraisal, title search and title insurance, escrow charges, recording fees and prepaid items such as property tax and insurance. Closing costs are separate from the down payment and are generally paid in cash at closing, though some can be rolled into the loan or covered by seller concessions.
How is the 28/36 rule used?
The 28/36 rule is a conventional US affordability guideline cited by the Consumer Financial Protection Bureau: monthly housing costs (principal, interest, taxes and insurance) should not exceed 28% of gross monthly income, and total monthly debt payments should not exceed 36%. Lenders use debt-to-income ratios like these, alongside credit score and reserves, to assess how much a borrower can responsibly repay.
Tài liệu tham khảo
- Freddie Mac. Primary Mortgage Market Survey (PMMS) — weekly mortgage rate averages. freddiemac.com/pmms.
- Consumer Financial Protection Bureau (CFPB). Debt-to-income ratio and mortgage affordability guidance. consumerfinance.gov.
- US Department of Housing and Urban Development (HUD). Buying a home and understanding closing costs. hud.gov.
- Consumer Financial Protection Bureau (CFPB). Private mortgage insurance (PMI) and the Homeowners Protection Act. consumerfinance.gov.
- Federal Reserve Board. A consumer's guide to mortgage settlement costs and refinancing. federalreserve.gov.