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Your monthly mortgage payment includes Principal & Interest (P&I), property taxes, homeowner's insurance, and possibly Private Mortgage Insurance (PMI) if your down payment is less than 20%. We also factor in HOA fees if applicable. The P&I is calculated using the formula: M = P[r(1+r)^n]/[(1+r)^n-1] where P = loan amount, r = monthly interest rate, n = number of payments.

Private Mortgage Insurance (PMI) is required when your down payment is less than 20% of the home's value. It protects the lender if you default. PMI can typically be removed when your loan-to-value ratio reaches 80% through payments or home appreciation. Some loans automatically cancel PMI at 78% LTV.

Generally, your total monthly housing payment shouldn't exceed 28% of your gross monthly income, and total debt payments shouldn't exceed 36-43% (debt-to-income ratio). Our affordability calculator considers your income, debts, credit score, and down payment to provide a personalized recommendation.

15-year mortgages have higher monthly payments but significantly lower total interest costs and faster equity building. 30-year mortgages have lower monthly payments but higher total interest. A 15-year loan typically saves $100,000+ in interest but increases monthly payments by $500-800 depending on loan amount.

Biweekly payments (half your monthly payment every two weeks) result in 26 payments per year, equivalent to 13 monthly payments instead of 12. This extra payment goes directly to principal, potentially saving 4-6 years off your loan term and tens of thousands in interest.

Closing costs typically range from 2-5% of the home's purchase price. They include loan origination fees, appraisal, title insurance, attorney fees, inspection, and prepaid items like property taxes and insurance. Our calculator estimates closing costs at 3% of the home price.

Credit scores significantly impact your interest rate. Excellent credit (740+) gets the best rates, while scores below 620 may require FHA loans or higher rates. A 1% rate difference on a $300,000 loan costs about $175 more per month and $63,000 more over 30 years.

Beyond your mortgage payment, budget for maintenance (1% of home value annually), utilities, homeowner's association fees, and potential special assessments. Property taxes and insurance can also increase over time. Our calculator includes these factors for a complete cost picture.

Discount points cost 1% of your loan amount to reduce your rate by typically 0.25%. Points make sense if you'll keep the loan long enough to break even (usually 5-7 years). Calculate the monthly savings versus upfront cost to determine if points are worthwhile for your situation.

Consider refinancing when rates drop 0.5-1% below your current rate, you want to change loan terms, eliminate PMI, or tap home equity. Factor in closing costs (typically 2-3% of loan amount) and how long you plan to stay in the home. Our calculator can model refinancing scenarios.