# 7 Mortgage Calculation Steps to Buy a Home

Free mortgage calculators make it easy to run figures and get ballpark estimates to guide you through the home-buying process. Here are 7 steps for calculating your way to home ownership.

1. Down Payment Savings Calculator

Unless you're eligible for a Veterans Administration-backed or USDA rural housing loan, you must come up with a down payment. FHA loans have the lowest requirement -- just 3.5 percent of the purchase price. Use the savings calculator to see how much you can save, given a set period of time and a monthly contribution to an interest-bearing savings account.

2. Prequalifying Mortgage Calculator

Learn how much you can borrow with the prequalification calculator. This calculator gives you a rough idea of how lenders see you, considering your gross monthly income, local property tax rate, savings for down payment and closing costs, as well as monthly debt obligations, such as credit card bills, car loans, alimony, and others. Enter these factors, along with the loan term and a mortgage rate, to estimate the maximum loan for which you can qualify.

3. Home Affordability Calculator

Here's another way to estimate much you can borrow. Enter an amount you think you can afford to pay each month for a mortgage along with a loan term of 15, 20 or 30 years and the mortgage rate you're likely to get today. The affordability calculator estimates the loan amount to achieve that monthly payment size.

4. Closing Costs Calculator

Understand the fees and other costs of a mortgage with the closing costs calculator. This tool accounts for one-time expenses, such as title insurance and appraisal, as well as recurring costs, such as property tax and property insurance.

5. Loan APR Calculator

The annual percentage rate reflects the true cost of a loan, including interest, points, and other closing costs. Once you have an estimate of closing costs and an interest rate quote, use this mortgage calculator to determine the APR.

6. Loan Comparison Calculator

Get several quotes from competing lenders and compare them side by side using the loan comparison calculator. As you weigh alternatives, compare mortgages with the same interest rate and loan amount but different terms -- a 15 year versus 30 year loan -- and see how changing the loan amount, but keeping the same interest rate and loan term, impacts the monthly payment.

7. Amortization Calculator

Finally, get a full amortization schedule for a mortgage with the amortization calculator. This lets you see how much you pay each month in interest and principal through the life of the loan.

Online mortgage calculators make easy work out of doing the initial financial estimates as you think about buying a home. Get ready to run the numbers and fulfill your dreams.

Kay Maxwell is a freelance writer who specializes in mortgage and finance topics.

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5/1 ARM

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