Buying a House
Essential Calculators
Use these tools to run the numbers for this scenario.
Action Plan Checklist
- Check your credit score (aim for 740+ for best rates).
- Save for a down payment (ideally 20% to avoid PMI).
- Calculate your maximum monthly payment based on your income.
- Get pre-approved for a mortgage before house hunting.
Required Reading
Deep dive into the strategies behind this use case.
How Mortgage Amortization Works
Understand the timeline of your home loan. Learn why early mortgage payments consist mostly of interest and how extra payments can save you thousands.
What Credit Score Do You Need for a Mortgage?
Understand the minimum credit score requirements for different types of mortgages and how your score impacts your interest rate.
Key Terminology
Understand the financial and mathematical terms involved.
Worked Examples
Real-world scenarios with step-by-step calculations.
Buying a $400,000 Home with 20% Down
By putting 20% down, the buyer avoids Private Mortgage Insurance (PMI). However, over the 30-year term at a 6.5% interest rate, the buyer will actually pay more in interest ($408,144) than the original loan amount itself ($320,000).
View in Calculator →Frequently Asked Questions
How much house can I afford?
A general rule is that your monthly housing costs should not exceed 28% of your gross monthly income.
Should I put 20% down?
Putting 20% down helps you avoid Private Mortgage Insurance (PMI) and lowers your monthly payment, but many loans allow 3% to 5% down if you prefer to keep cash on hand.