Monthly payment
Keep in mind, if you are first time homebuyer, there are other monthly costs of home ownership that you may need to budget for, such as real estate taxes and homeowners insurance. Utility costs may be higher in your new home and there may be lawn/pool care or homeowner association fees. You should prepare a budget of all of these costs plus your existing monthly obligations such as car payments and credit card bills. Then you can determine how much you are comfortable spending on your mortgage payment of principal and interest.
Now that you have an idea of the monthly payment you can afford, you need to figure out how much you can borrow and what loan program will satisfy that monthly payment goal.
At this point it is best to speak with a loan counselor. They can help you work through the various scenarios and numerous programs available based on the information you provide them. They can also tell you if your goals are in line with lending parameters.
If you want to experiment on your own before consulting a loan counselor, you can use our mortgage calculators to see the payment amount for various loan scenarios. For instance, let's say you are looking at a home for $200,000 and have $20,000 to put down. That leaves a loan amount of $180,000. Using the mortgage calculator you can determine that the payment amount on a $180,000 loan over 30 years (360 months) is $1,079 at a 6% interest rate. If your monthly payment goal is $1,000 for principal and interest, you can then try some other options such as a 40 year amortization or interest only payment. Using the same numbers but changing to a 40 year amortization will decrease your payment to $990.
We can answer any questions you may have along the way. Just fill out the form below and we will have a loan counselor contact you. There are no fees for these services and we won’t pull credit until you are ready to go forward.
How large a down payment can I make?