# Mortgage Calculator and Costs

Determining how much home you can afford can seem daunting, but it’s actually pretty easy with the help of a neighbor at Bath Savings.

## How do I calculate a mortgage payment to determine how much home I can afford?

To start, you can use our Mortgage Calculator below to determine what a monthly mortgage payment for a new home or refinance will be, including escrow items like property taxes and insurance.

Remember that, in addition to your monthly mortgage payment, there are a number of potential additional one-time costs to consider, including:

• Downpayment (varies between 3% and 10%)
• Closing costs (generally about 2.5%)
• Prepaid expenses (pre-paid escrow costs like property taxes and insurance premiums)
• Utility adjustments (generally heating/cooking fuel)
• Cash reserves (if applicable)

## Mortgage Calculator

Many homebuyers ask, "How much do I qualify for?" when inquiring about purchasing a home, however, there is often a difference between what someone qualifies for and what someone is realistically comfortable affording. The calculator below attempts to identify: what your comfortable/target payment is for a home, how much of a loan that payment can support and whether or not you may qualify for that amount.

### Step 1: How much of a loan will my comfortable/target payment afford?

How much are you comfortable spending per month for a mortgage (including real estate taxes, homeowner's insurance, PMI, HOA's, etc.)? Hint - if you're unsure, start with your current rent payment, if applicable, to see how much that might afford.
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Real estate taxes and homeowner's insurance are two expenses that directly impact how much of a loan you can afford; these expenses vary depending on the property and other factors. Enter the estimated monthly amount of each to the right. Example: \$800 annually for homeowner's insurance divided by 12 = \$67/mo. Homeowner's Association Fees (HOA's) are shared common-area costs that are typical for condominiums.
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The amount displayed to the right represents the remaining principal & interest payment after taxes, insurance and HOA's are deducted. This figure, along with loan term and interest rate, is used to calculate the loan amount that your target payment can afford.
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Interest rates are subject to change and vary depending on loan product. Click here to see today's conventional loan rates. Enter your desired rate and term. Note that the maximum term is 30 years.
The figure to the right represents the loan amount that your target monthly payment will support.
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### Step 2: Do I qualify for this loan amount?

Lenders must determine whether or not you can support a mortgage financially. Below are a few formulas lenders use to calculate Gross Monthly Income which is the amount paid per month before deductions for taxes or other benefits. It is recommended that you speak with a mortgage professional to calculate income if self-employed as net income from your Federal Tax Return is used for qualifying purposes.

• To calculate based on hourly earnings: Gross Monthly Income = (hourly wage x hours worked per week x 52 weeks)/12 months
• To calculate based on weekly earnings: Gross Monthly Income = (gross income per pay period x 52 weeks)/12 months
• To calculate based on bi-weekly earnings: Gross Monthly Income = (gross income per pay period x 26 weeks)/12 months
Gross Monthly Income
(before taxes)

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Total Income
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Debts
(enter minimum monthly required payments)

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Proposed Housing Exp.
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Total Debt
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Debt-to-Income (DTI) ratios compare how much you owe vs. how much you earn on a monthly basis and are used to evaluate whether or not someone has the ability to repay a loan. The Housing Ratio compares your proposed housing expense (principal, interest, taxes, insurance, PMI and HOA's) to your monthly income. The total Debt Ratio considers all monthly debt including proposed housing payment, auto loans, student loans, credit cards, etc. While maximum ratios vary depending on loan product, 33% for Housing and 43% for Total Debt are standards often used for conventional mortgages.

Housing Ratio
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Debt Ratio
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### Step 3: What purchase price should I be looking at?

So far we've determined the loan amount that your comfortable/target monthly payment will support and whether or not you may qualify for that amount. Another crucial question to consider is: how much of a down payment are you looking to apply? To determine the purchase price you should be looking for, add your down payment to the loan amount. A 20% down payment is often required in order to avoid paying Private Mortgage Insurance (PMI).

#### Scenario #1: 20% Down Payment

The figures to the right represent a 20% down payment based on the loan amount from above and estimates how much cash you'd need to complete the transaction, including estimated closing costs.

20% Down Payment
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Loan Amount
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Target Purchase Price
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Est. Closing Costs (2.5%)
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Total Cash Needed for Closing
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#### Scenario #2: Minimum Down Payment

A 20% down payment is not possible for everyone. Minimum down payment requirements vary depending on the loan product. It is recommended that you speak with a Loan Officer to determine your eligibility for other loan programs. For conventional financing, a minimum of a 3% down payment is required. In this instance, PMI will apply which directly affects your overall monthly payment for a home. How much PMI will cost varies based on your down payment, loan amount and credit score. The figures to the right represent: an estimated monthly PMI payment assuming good credit and the impact to the loan amount that your target payment will support.

Estimated Monthly PMI:
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Reduced Loan Amount with PMI:
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The figures to the right represent the minimum 3% down payment for conventional financing based on the reduced loan amount from above and estimates how much cash you'd need to complete the transaction, including estimated closing costs.

Minimum 3% Down Payment
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Loan Amount
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Target Purchase Price
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Est. Closing Costs (2.5%)
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Total Cash Needed for Closing
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• This is not a commitment to lend.
• The information provided by these calculators is for illustrative purposes only.
• Results are not guaranteed and do not consider all loan program offerings. Speak with a Loan Officer for further information on other loan programs.
• Homeowner's Insurance and property tax amounts can fluctuate from year to year.
Talk to a neighbor. We know the home buying process can be intimidating. We can help you through it. Schedule a meeting or call us today at 1-800-447-4559.

## Mortgages we offer

Whether you have found a house for your family to call home, land to purchase in your ideal location, or have the blueprints to build or renovate the home of your dreams, we can help.