Your home is likely the biggest purchase you will make, so it’s important to calculate your monthly payments before you buy a house. Real estate monthly expenses are more than just the mortgage payment, which includes principal and interest; they also include costs like property tax, home insurance, HOA fees, and monthly PMIs. By calculating your house monthly payment ahead of time, you will be more prepared to make good financial decisions around the purchase of your home.
This is what a typical monthly real estate payment calculator can look like. You can build your own or use this free real estate calculator that you can build on yourself.
If you are interested in seeing the monthly amortization schedule for the loan (e.g., how the principal and interest payments vary by month) you can check out this blog and template.
How to lower your monthly real estate payment
There are a few factors that can help you lower your real estate monthly payments. Below are some of the most effective ways.
- Borrow less money. You can do this by paying a higher down payment or buying a house that costs less. This is by far going to make the biggest impact on your monthly home payments.
- Have a longer loan. Longer term loans are split out over more years so monthly payments are much lower. Note, however, that you will end up paying more interest over the life of the loan for longer loans.
- Shop for a lower interest rate. Always shop your loans around multiple banks to ensure you are receiving the best offer for your situation. No two people will receive the same exact rates because every one has different credit scores, work backgrounds, and types of homes. Therefore, when you are buying a home, it makes sense to check with multiple vendors to see who will give you the lowest rate/deal.
How to get a lower interest rate for your mortgage
There are a few factors that affect your mortgage rate, including your personal credit score, the location of the home, the price of the home, how large of a loan you are taking out, the loan terms, and even loan types, among others (such as if you are a first time home buyer, or buying a commercial property, or buying the property under an LLC).
Generally think of the interest rate as the risk the bank perceives the loan to have. The more risk that is perceived, the higher the interest rate.
Commonly asked questions
1. Are real estate taxes paid monthly or yearly? Typically, they are paid monthly.
2. What is the real estate down payment? When you buy a home, you have to pay for at least some part of the home in cash, which is considered your down payment. Historically, people have put down roughly 20% of the total cost of the house as their down payment, but that number can be flexible.
3. How much are house payments a month? This depends on the price of the home, how big of a mortgage you took out, property taxes, insurance, and any HOA fees or PMIs.
4. Can you buy a house in payments? Yes, in fact most people do not buy a house fully in cash and end up taking out some form of mortgage.
5. How much of a monthly house payment can I afford? There is no right or wrong answer. The real estate monthly calculator above will help you figure out how much you will need to pay in cash per month at a minimum.
