What will my house payment be?

For the lickety-split estimate on your monthly payment, use our handy Basic Mortgage Calculator. If you’re looking for the mechanics to reduce your house payment,  here are some tips:

Your house payment will depend on several different factors:

  • House purchase price—Obviously, the higher the cost of your house, the higher your payments will be
  • Down payment—A higher down payment will mean lower monthly payments
  • Loan type—Different types of loans will have different interest rates and requirements that can affect your monthly payment
  • Loan Term—A 10- or 15-year loan will have much higher monthly payments than a 20- or 30-year loan.
  • Mortgage insurance—If you have less than a 20% down payment, you will typically have some sort of private mortgage insurance (PMI).
  • Taxes—Most banks offer the service of figuring your property taxes into the monthly payment, where they are stored in an escrow account. Depending on the county / city you choose to live, and the size of your home, property taxes can fluctuate quite a bit.
  • Homeowners insurance—As long as you owe money on your house, you’ll have to purchase homeowners insurance. Most banks offer to lump your homeowner insurance  into your monthly payment, where they are stored in an escrow account and paid annually on your behalf.

Put all of those individual pieces of the puzzle together, and you’ll have a pretty good idea of what your monthly payment on your house will be.

When Do I Start Making Payments?

The good news is that your first house payment isn’t usually due until the first full month after your closing. If you close on May 15th, for example, your first payment will be due on July 1st. This means you can take a deep breath, make a celebratory toast, and let your cash flow catch up a little on closing costs. At closing, interest is pre-paid for the remaining days of that month. The next month is “skipped” because mortgage interest in paid in “arrears.” That means, in our example above, your payment in July includes the interest that accumulated in the month of June. This is the reason shorter mortgages can save you so much in the long run—you pay more of the principal every month, so there is less to accrue interest on each month.