Calculating Your Monthly Mortgage Payment

Before you start shopping for a home in Massachusetts, you’ll want to understand how much you can afford to spend on a mortgage. A good first step is crunching some numbers with Needham Bank’s mortgage calculator to figure out potential monthly mortgage payments. Once you calculate your desired monthly mortgage payment, you’ll be better equipped to select the best mortgage and home for your needs. Here’s a guide to the top factors that most mortgage loan calculators use as inputs, and tips on next steps. 

Monthly mortgage payment factors 

According to American Housing Survey data from the U.S. Census Bureau, the median monthly mortgage payment is about $1,030. This breaks out to a national average of between $1,022 and $1,505 per month, depending on loan rate and duration. That number changes depending on where you live. In Massachusetts, for example, the average monthly mortgage payment is $1,333, according to Lending Tree. There are several variables that affect your monthly mortgage payment, including:

  • Loan amount: The total amount you will borrow from a mortgage lender to buy your home.
  • Interest rate: The cost to borrow money from a lender to buy a home, which is represented as a percentage of the principal loan amount. This will vary depending on your credit score, the amount of your down payment and housing market values. 
  • Loan term: The amount of time your mortgage is set for. Typically, loan terms for mortgages are 15 to 30 years, but there are often other adjustable-rate term options. 
  • Property taxes: The amount that is collected by local, state or federal municipalities, which is based upon the value of your property. Use this guide to find the average property tax rates in Massachusetts and around the country. 
  • Home insurance: The cost to insure your home based on your home features, where you live, your possessions and other details. 
  • Private mortgage insurance (PMI): PMI be get added to your monthly mortgage payment to help protect the lender in case you default on your loan. PMI is typically charged to anyone who is putting down less than 20% of the home purchase cost up front. 
  • Homeowners’ association fees: For those who live in a planned development or condo, there may be additional fees to cover expenses for shared amenities and services like snow removal, pools and landscaping. 

Use a mortgage calculator 

Once you’ve gathered the above information, you can plug your numbers into our mortgage payment calculator to discover your monthly payment. Remember to use these numbers as a guide and play around with different loan terms and interest rates to see how your mortgage payment may change. 

Pre-qualification and pre-approval

Once you have a good idea of the amount you’d like to spent on your monthly mortgage payment, aim to get pre-qualified and then pre-approved for a mortgage. Pre-qualification offers you a high-level estimate of how much you can afford. A pre-approval will give you a better sense of how much your mortgage will cost you and can help you gain leverage with sellers. 

It’s important to save room for other incidental expenses, like maintenance and emergencies, so be cautious about spending the full amount for which you qualify.

Needham Bank can help guide you through the process and find the right mortgage for you. Learn more about Needham Bank’s residential loan options or contact us today to get started.