Massachusetts Mortgage Calculator
Buying your first home is a big financial milestone. A Massachusetts mortgage calculator can help you see how the purchase price of a home, plus other factors, affect the monthly mortgage payment.
There are certain things that potential borrowers should be aware of before and during the process of shopping for a new home. It can be difficult to estimate your mortgage payments, which is crucial if you want to understand how your house payment may (or may not) fit into your budget.
Fortunately, with some basic information about your income, debt, potential home price and an estimate of your interest rate, you can use an online mortgage calculator to help you figure out how much a home in Massachusetts may cost each month.
How to Calculate a Mortgage Payment
There are several factors that go into calculating your monthly mortgage payment. The amount of money you pay for the house, the amount of interest you pay, whether you include closing costs in your mortgage, the property taxes in the area and insurance premiums. They all play a part in your total monthly mortgage cost. Here's how those factors break down:
Typical Costs Included in a Mortgage Payment in Massachusetts
Mortgage loan officers may refer to the main components of your mortgage payments as PITI (principal, interest, taxes and insurance).
Principal: The amount you borrow from a mortgage lender to cover the purchase price and possibly the closing costs of your home.
Interest: The percentage of the total amount borrowed you pay the mortgage lender as a fee for getting access to the principal.
Taxes: Every community has property taxes, which is a percentage of the total value of your home and property. Your property tax amount has two components: the assessed value of your house and the local tax rates.
Insurance: Lenders require you to carry a minimum amount of homeowner's insurance and liability insurance to help protect the investment. If your home is damaged in a fire, storm, or another disaster, insurance pays the costs associated with returning your home to its pre-disaster state. If there's an accident on your property, you may be legally liable to pay damages. Liability coverage helps pay costs associated with accidental injuries that occur on your property.
Private Mortgage Insurance (PMI)
Depending on the size of your down payment and your lender's requirements, you may be required to pay private mortgage insurance (PMI) premiums. It's typically added to your monthly mortgage premiums if you made a downpayment of less than 20% on your home.
This type of insurance is designed to protect the lender from financial losses if you default on your loan and owe more than they can get from selling the house. While PMI may help you qualify for a loan, it will not help you if you fall behind on your monthly mortgage payments. 1
How Much Is PMI in Massachusetts?
PMI premiums differ according to your loan type, credit score, down payment amount and lender requirements. Ask a BFCU mortgage loan specialist about our no-PMI home loans.
How a Massachusetts Mortgage Calculator Helps You
A mortgage calculator estimates your monthly mortgage payment based on information specific to your loan. It helps you understand whether you can realistically afford to make your potential house payments.
A mortgage calculator may also help you compare the costs of renting your home with how much it would cost you to own a home.
What Are the Current Mortgage Rates in Massachusetts?
Mortgage interest rates go up and down every day. The amount of interest you pay on a home loan is affected by a number of factors; some are out of your control. Interest rates differ, depending on the type of loan you choose.
The best way to get an estimate of how much interest you may pay on a mortgage with BFCU is to fill out a purchase and prequalification application. If you want to know the average interest rate on a home loan in Massachusetts, the Consumer Financial Protection Bureau offers state-by-state, up-to-date average interest rates.
How Lenders Decide How Much You Can Afford to Borrow
Lenders use a few factors to estimate how much money you can afford to borrow to buy a home. A mortgage calculator can help you figure out whether you can afford the home you want in Massachusetts.
Lenders consider these aspects of your financial life:
Your annual gross income: This is the total amount of money you make in a year, before taxes come out of your paycheck.
Your total monthly debt payments: Include student loans, credit cards, personal loans, store charge cards and auto loans.
The amount of money you have for a downpayment: Don't worry, you may be able to get approved for a mortgage, even if you don't have money for a downpayment.
The loan term: This is the number of years you'll make payments before the house is paid off. A mortgage typically has a 15 or 30 year term. BFCU offers special 40-year-term mortgages to qualifying applicants.
Your debt-to-income ratio (DTI): In general, you'll need a DTI ratio of 36% or less to qualify for a mortgage. Lenders figure out your DTI by taking your total monthly debt payments divided by your total monthly gross income. For example, if your total debt payments are $775 each month and your gross income is $3,200 each month, your DTI is 24%.
Housing ratio: To get approved for a mortgage, most lenders require a housing ratio of 28%. This number represents your monthly mortgage payment divided by your monthly gross income. For example, if your future mortgage payment is $875 per month and your gross monthly income is $3,200 per month, your housing ratio is 27%. 2
How Much Money Do You Need to Buy a House in Massachusetts?
The median cost of a home in Massachusetts is $510,500. That's quite a bit higher than the national median home cost of $291,700. When you consider that the average cost of renting a two-bedroom apartment in Massachusetts is $1,790, buying a modestly-priced home makes sense for some people. 3
First-Time Homebuyers in Massachusetts
We offer a First10 Mortgage designed especially for police officers, EMTs and firefighters buying their first home in Boston. We also offer mortgages with fixed and adjustable rates. It can be challenging to find a home in the city with rising real estate costs and restrictive mortgage rules. BFCU is here to help with a solution that makes getting into your first home much easier.
Want to know more? Start with our Boston Mortgages.
1 Consumer Financial Protection Bureau, 2017, What is private mortgage insurance?, Accessed September 8, 2021, [CFPB.com]
2 Freddie Mac, 2021, Home affordability calculator, Accessed September 8, 2021, [myhome.freddiemac.com]
3 Bestplaces.net, 2021, Cost of Living in Massachusetts, Accessed September 8, 2021, [bestplaces.net]