How Do I Calculate My Mortgage Payment Without Using A Mortgage Calculator?

Calculating an exact mortgage payment without a calculator on a loan is no small task, but there are some simple rules-of-thumb you can use to get a close estimate.

With the exception of the MIT Blackjack Team, performing this type of complex math in your head often leads to frustrating rants.

When coming up with a rough estimate, it is important to understand the individual components that factor into the overall monthly mortgage payment.

Yes, the thousands of dollars you send to your lender every year may cover more than just the mortgage, but referring to one simple formula will help you gauge what the new payment will be as you’re out looking for new properties that may be in your price range.

What’s In A Mortgage Payment?

A mortgage consists of 4-6 parts:

  • Principal – the balance of the loan
  • Interest – the fee paid to borrow the mortgage money
  • Property Taxes – based on county assessed value and residence type
  • Hazard Insurance – in the case of fire or property damage (may include a separate flood policy)
  • Mortgage Insurance – more than 80% LTV on conventional loans, or with FHA financing

Most lenders use the acronym (PITI), which includes Principal, Interest, Taxes and Insurance.

And in the case where a separate Mortgage Insurance Premium is required, we add another “I” to the end of that creative series of letters.

Another monthly expense that you have to consider is the monthly dues that come with properties that have a homeowner’s association (common in condominiums and other developments). This isn’t a payment made to your lender, but you will have to qualify with that payment and it is also best practice for you to factor that in the monthly cost of your new home.

Confused yet? Don’t worry, this is slightly easier than most state bar exams.

The Mortgage Payment Cheat Sheet:

Ok, you’ve made it this far and haven’t closed your browser, so that is a good thing.

Please keep in mind, this top secret formula will by no means be exact.

Mortgage Payment Formula:

For every $1000 you borrower, your TOTAL monthly mortgage payment will be $8.

So, if you purchase a home for $250,000 with a $50,000 down payment – borrowing a total of $200,000, then a good estimated total monthly PITI payment would be roughly $1600.

But don’t forget to add your homeowners association dues to that monthly payment.

What If I Pay Taxes and Insurance Separately?

Well now we’re at the easy part. If you elect to pay taxes separate from your mortgage, the cheat sheet is reduced from $8 per $1000 down to $6 per $1000.

So there you have it. $8 for every $1000 borrowed.

Again, please keep in mind that this is not going to give you an EXACT payment. You may be purchasing a property with higher real estate taxes or your insurance premiums may be higher than average depending on the state you live in.

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March 28, 2010 by · Leave a Comment

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About Lester

In 1973, I graduated high school and started college. In 1977, I met and married my wife Deborah of 40 years, put on a suit and tie, and went to work for Prudential Insurance Company. In 1979, my wife was offered a great job as an advertising executive for a San Jose television station, so we moved from the Monterey Bay area to San Jose, CA. I needed a new job in San Jose and I didn’t really want to start from scratch with a new insurance office. While going to college, I had managed a Travelodge, and it was that management experience that landed my new job and started my career in real estate as a property manager. In 1980, I completed my first certification course with the National Apartment Management Accreditation Board (NAA), and in 1983, I earned my Certified Apartment Manager (CAM) designation which I keep current today. In 1984, my daughter Pearl was born, and in 1987, my son Max was born. When I was managing rental properties, many of my tenants wanted to become homeowners, so in 1988, I got my real estate sales license with the California Department of Real Estate to help them with that goal. As a new Realtor, I found that obtaining financing is the first and most important step to shopping for a home, so in 1989, I completed my first of many programs in real estate finance and loan officer training. In 2000, I stopped doing property management and real estate sales altogether, to concentrate on mortgage loan origination exclusively with Coast Capital Mortgage. In 2004, I moved from Coast Capital Mortgage to join First Priority Financial. In 2014, First Priority Financial changed its business model from mortgage brokerage and banking to just mortgage banking. To better serve my clients and stay a competitive mortgage broker, I joined C2 Financial Corporation. How many people can truly say that they love the company that they work for? I can! ◾C2 Financial Corporation is a mortgage brokerage and a banker. ◾They are A rated and accredited by the Better Business Bureau. ◾Members of National Association of Mortgage Brokers ◾FHA and VA approved. ◾Managed by principals with over 62 years experience in the mortgage industry. ◾Partners with the largest banks in the U.S. ◾One of Scotsman’s Guide Top Mortgage Originators of 2012 and 2013. I’m a lucky guy that loves my job and the people that I work with. Every day borrowers entrust me with one of the most important financial decisions of their life and I don’t take that responsibility lightly. I do what is best for my clients and know that by doing so I’m not only doing what is morally and ethically right, this belief system will result in my borrowers referring me additional clients, which is the best long-term business model. So far so good!

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