A 30-year fixed-rate mortgage will help keep your monthly payment low, but you’ll pay more interest over the life of the loan. A 15-year fixed-rate mortgage can reduce the total interest you’ll pay, but your monthly payment will be higher. Regardless of which term you choose, fixed-rate mortgages have interest rates that are locked in for the life of the loan.

A mortgage payment calculator can help give you a reality check on just how much home you can afford. Keep in mind, this calculator shows only your monthly mortgage payment. It doesn’t include other homeownership costs like taxes, homeowners insurance and private mortgage insurance (PMI).

With minimum down payments as low as 3% commonly available, it’s easy to put just a little money down. A mortgage payment calculator can help you decide on the best down payment amount for you.

## Can I lower my monthly payment?

Here are ways you can lower your monthly payment:

• Extend the loan’s term. Your payment will be lower but you’ll pay a lot more interest over the added years. You can change your loan term in the calculator to see the impact on your monthly payment.
• Buy less house. Obviously, taking out a smaller loan means a smaller monthly mortgage payment.
• Avoid paying PMI. By putting down 20% or more, you won’t have to pay private mortgage insurance. However, if you’re looking at FHA loans, mortgage insurance can last for the entire length of the loan.
• Get a better interest rate. Putting more money down not only can eliminate PMI, but lower your interest rate, too. That means a lower monthly mortgage payment. Shopping at least three lenders can also increase your odds of getting a better mortgage interest rate.

For the paper-and-pencil mathletes out there, the mortgage payment calculation looks like this:

M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1]

The variables are:

• M = monthly mortgage payment
• P = the principal amount
• i = your monthly interest rate. Your lender likely lists interest rates as an annual figure, so you’ll need to divide by 12, for each month of the year. So, if your rate is 5%, then the monthly rate will look like this: 0.05/12 = 0.004167.
• n = the number of payments over the life of the loan. If you take out a 30-year fixed rate mortgage, this means: n = 30 years x 12 months per year, or 360 payments.