How To Use A Mortgage Calculator Effectively

The first step in using a mortgage calculator effectively is to select the right tool based on what you want to accomplish.

Buy A Home

If you are planning to buy a home, you can use our affordability calculator that determines how much you can afford to pay for a home by looking at your income, your debts, and down payment. It will calculate a monthly payment, a loan amount and a purchase price at various debt-to-income ratios. Your debt-to-income ratio is one of the important ways that mortgage lenders assess the risk of lending to you. A critical mistake that many borrowers have made is they shop for a home that is priced so they will be at or near the maximum debt-to-income ratio and loan amount that the lender will approve for them. Using a high proportion of your income to pay your mortgage increases the risk of foreclosure or bankruptcy in the event you incur to cover unexpected expenses such as high medical bills or unexpected loss of income like job loss. A more prudent strategy would be to significantly reduce their risk by purchasing a less expensive home that results in a lower debt-to-income ratio and that fits within your risk comfort level and your means.


If you are considering refinancing your mortgage to reduce your monthly payment or the total amount of interest you will pay on your mortgage, you can use a refinance calculator that evaluates your current loan and the new loan you may refinance into. It may consider your income tax rate and how much on average that you earn on investments. It will then calculate when you are projected to break-even on the refinance. The goal is to refinance into a mortgage with a break-even date that is well in advance of the date you plan to sell your home.

If you are considering refinancing your mortgage to reduce your risk, for example to convert from an adjustable rate mortgage to a fixed rate mortgage, you can assess your current risk by evaluating the impact of different future interest rate scenarios on your minimum monthly payment and total interest paid for your current mortgage.

Pay Off Mortgage Early

If you are considering making additional principal payments on your mortgage, you can use an extra payment calculator to estimate your savings and how quickly you can pay off your mortgage.

Why You Should Use a Mortgage Calculator

If you want to purchase a home, are wondering whether or not you should refinance your mortgage, or want to know how much money you would save by paying off your mortgage early, you should consider using a mortgage calculator because:

What A Mortgage Calculator Can Do

Make smarter mortgage decisions with a mortgage calculator that can help you: