Complete guide: Mortgage
Updated:
A mortgage finances the difference between a home's price and the down payment. A 200,000 home with a 40,000 down payment needs a 160,000 loan, or 80% of the price. Payments depend on principal, fixed nominal annual rate and term in years.
The monthly housing budget adds the loan payment to annual property taxes divided by 12, annual insurance divided by 12 and other monthly costs. Include association dues, additional insurance or other quoted charges there. Defaults are examples; no country's taxes or fees are assumed.
The annual schedule shows loan payments, principal repaid, interest and remaining balance; it does not mix insurance or taxes into amortization. Closing costs are separate upfront payments. The acquisition cost shown includes price, closing costs and interest, but excludes recurring housing costs. Variable rates, rate resets and prepayment penalties are not modeled.
How it works
- 1Loan principal = home price − down payment.
- 2We calculate fixed payments at a fixed nominal rate and group amortization by year.
- 3Monthly budget = payment + extra + taxes/12 + insurance/12 + other costs.
Frequently asked questions
How does the loan payment differ from monthly housing cost?
The loan payment repays principal and interest. The housing budget adds extra payments, insurance, taxes and other entered expenses.
How does a larger down payment help?
It reduces financed principal and, at the same rate and term, lowers payments and total interest.
Does it include purchase taxes and mandatory insurance?
Only the amounts you enter: purchase costs go under closing costs; insurance and recurring costs have separate fields.