Methodology and assumptions

The monthly payment

Loan and interest use the standard mortgage formula. We take your yearly rate and divide it by 12 to get a monthly one, and we count one payment for every month in the term. At a rate of zero, we just split the loan evenly across the months.

The whole housing payment

The main tool adds property tax, home insurance, PMI and any association fee. You can edit all of them. Closing costs are counted in the cash you need on the day, not in the monthly payment. We hold tax, insurance and fees steady over the years, which keeps the picture clear even though real bills drift.

PMI and when it stops

We add PMI when the loan starts above 80% of what the home was worth. You can ask for it to stop once the schedule says you owe 80%. It has to stop by itself at 78%, or at the halfway point of the loan if that comes first, as long as you are paying on time.

The PMI tool also runs a second schedule with your extra payments in it, to find when you could ask early. That is a date you can ask on, not a date it stops by itself. We do not cover FHA or VA loans, insurance the lender pays for, later valuations, or rules your particular lender adds.

Closing costs

The main tool takes a share of the price of the home, which is the rough guide the CFPB gives. The separate closing-cost tool goes item by item, and its percentages come off the loan amount instead. That is on purpose. Lender fees grow with the loan. A point is defined as 1% of the loan too. So the same number in both tools gives you different dollars. Each field says which one it uses. Both are guesses until you have real paperwork.

What you can afford

We take your monthly pay before tax. We multiply it by the share you are willing to spend on debt. Then we take off what you already owe each month. What is left is your housing budget. Then we search for the price whose payment fits it. The search grows until the payment is genuinely too big, and it tells you if it hits its own upper limit instead of pretending that limit is your answer.

Debt-to-income

The housing-only figure is the home payment divided by your monthly pay before tax. The total adds your other debts first. Neither predicts what a lender will decide, and neither applies every rule a specific loan program has about what counts as income or debt.

The payoff schedule and extra payments

Each month, interest is what you owe times the monthly rate. Whatever is left of the payment comes off the balance. A monthly extra goes on every payment. A yearly extra lands after every twelfth. A one-off goes in the month you pick. All of it comes off the balance. The last payment is trimmed to whatever is left, and we compare the result against the same loan with no extras.

Paying every two weeks

We take half the monthly loan-and-interest payment and charge it every two weeks. Twenty-six of those is 13 monthly payments a year. Interest is worked out every two weeks, which assumes your lender credits each payment the day you make it. If yours holds the money or charges a fee, you save less than we show.

15 years against 30

Each term gets its own rate and its own full schedule. We leave out tax, insurance and fees here, so what you see is purely the loan payment and the interest each option costs.

Refinancing

We work out the old payment and the new one separately. The payback time divides what you pay up front by what you save each month. The lifetime figure sets the interest left on your old loan against the interest on the new one, plus its fees. If you type in the payment from your statement, we use that instead of working one out, and we get the years left from it too.

Sharing a scenario

Nothing you type goes into the address bar. A link is only built when you ask for one. It carries every field, so changing a default later cannot quietly change what an old link means. The affordability tool warns you first, because its link holds your pay and your debts.

Rounding

We keep the full precision while calculating and round only when showing you a number. So if you add up the rounded lines yourself, you may land a dollar off the total we show.

Primary references

• CFPB: calculating fixed mortgage payments
• CFPB: principal and interest versus total payment
• CFPB: PMI cancellation
• CFPB: down payments and closing costs
• Fannie Mae: debt-to-income ratios
• Freddie Mac: refinancing costs