How To Calculate Average Monthly Mortgage Payment
You can plug your numbers into the following equation: M = P [I(1 + I)^N] / [(1 + I)^N – 1] and add your homeowners insurance and property tax payments to the result.
P stands for the principal, I stands for the monthly interest rate and N stands for the total amount of months (not years) of your mortgage.
Here’s the example using national averages laid out in the next section:
You buy a home for $452,510 and put down 13%, or $58,826.
You borrow $393,683 to purchase the home. Your interest rate is 4.7% with a term of 360 months (30 years).
Using the equation above: M = P [0.3916666(1 + 0.3916666)^360] / [(1 + 0.3916666)^360 – 1]
Before taxes and insurance, your principal and interest payment is: $2,044.
Then, add this number to the homeowners insurance payment of $231 per month ($2,777 per year) and property tax payments of $415 per month ($4,978 per year).
Your total monthly mortgage payment would be about $2,690.
Keep in mind, if you have a conventional loan and your down payment is less than 20% – you’ll also need to add in PMI. This is about 0.1 – 2% of your loan amount on average.
Average Mortgage Payment Where You Live
If you don’t want to do all the math manually, our mortgage calculator will give you an individualized estimate of your monthly mortgage payment. Your ZIP code is a key piece of information because local real estate markets drive the cost of housing in your area.
While a calculator can give you a good starting estimate, it’s best to have an initial approval letter before you start working with a real estate buyer’s agent and looking for a home. Preapproval gives you a better idea of how much house you can afford and a better idea of what your monthly payment would be because the lender reviews your specific finances. Getting preapproved first means you have a lender’s financial backing, indicating your seriousness and financial capability to sellers and real estate agents.
