How do I calculate my mortgage payment?
First off, the easiest way to calculate a mortgage payment is to use a mortgage calculator, like the Georgia mortgage calculator we've included in this article. A calculator like this can do the heavy lifting for you, and there aren't many situations where anyone would need to calculate a mortgage payment manually. That said, if you're mathematically inclined or simply like knowing where your payment comes from, we can walk you through the process.
There are three different variables involved in the mortgage payment calculation -- principal, interest rate, and the number of mortgage payments you'll make.
Principal (P)
This is the amount of money you originally borrow when you obtain your mortgage, or your home sale price minus your down payment. And if you plan to roll any closing costs or lender fees into your principal, which is quite common with refinancing loans and FHA mortgages in particular, be sure to include those as well.
Interest rate (r)
Your loan's interest rate, but expressed on a monthly basis. To find yours, take your loan's interest rate (not the APR), convert it to a decimal, and divide it by 12. For example, if your mortgage interest rate is 7.5%, you would take 0.075 and divide it by 12, to find 0.00625.
Number of payments (n)
The number of monthly loan payments you're scheduled to make. For 30-year and 15-year mortgage loans, this is 360 and 180 months, respectively. If you have a different loan term, simply multiply the number of years by 12.
Putting it all together, here's the mathematical formula to calculate a mortgage payment:
It's also important to mention that this formula only calculates the principal and interest payment for a mortgage, which isn't likely to be the only thing you're required to pay each month. Specifically, most lenders require buyers to pay a prorated amount of their taxes and required insurance every month along with the mortgage payment, and if you put less than 20% down, you'll probably have to pay private mortgage insurance, or PMI.
To add these, take your most recent property tax bill and insurance premium, and divide each by 12 to figure out how much you need to add. And if you're buying a home and want to estimate yours, property tax bills can typically be found on the county's website and a local insurance agent can likely help you estimate your premium.
Things to know before buying a house in Georgia
We're focusing on mortgage payments in this article, but it's important to keep several other things in mind before buying a home in Georgia.
Georgia property taxes
The average Georgia homeowner pays 0.83% of their home's assessed fair market value in annual property taxes, which is near the middle of the pack nationwide, ranked 33rd out of 50 states. This means the typical Georgia property tax bill on a $300,000 home would be about $2,490 per year.
Insurance costs
When it comes to homeowners insurance, Georgia's average rates are just above the national average of $2,777, at $3,024 for a $300,000 home. It's also important to note this can vary significantly based on the geographic location of the property, and if you're buying a home in a coastal area, you may be required to carry flood insurance as well.
Credit and income requirements
Before you apply for a mortgage, it's a good idea to figure out if you're qualified. You'll need to meet the minimum credit scoring standards for whichever type of loan you're applying for -- at least 620 for a conventional loan and 580 for an FHA mortgage. You'll also need enough income to justify the loan, as well as a steady employment history. You should speak to several of the best mortgage lenders before you settle on a mortgage that will be best for your situation.
Rental restrictions
Are you planning to buy a second home or investment property in Georgia, or do you want the ability to list it on Airbnb or a similar platform when you aren't home? If so, be sure to check into local regulations governing short-term rentals. Many homeowners associations prohibit short-term rentals entirely, and it's not uncommon for entire cities to greatly restrict rentals, especially in areas with lots of tourism.
LEARN MORE: Home buyer checklist
Tips for first-time home buyers in Georgia
Homeownership assistance programs in Georgia
Like many other states, Georgia has a program to help make homeownership accessible to first timers. Specifically, the Georgia Dream Homeownership Program partners with lenders to provide conventional, FHA, USDA, or VA loans to eligible buyers. First-time home buyers can qualify, as can buyers who have not owned a home in the past three years or who buy a home in certain areas in the state.
The program provides up to $10,000 in down payment assistance to all eligible homeowners, but offers an additional $2,500 to public protectors (police, fire, EMT, etc), educators, or healthcare providers, as well as families with a member who is disabled.
How to qualify
Buyers must have household income under a maximum limit that varies by county, but ranges from $74,500 to $86,500, have liquid assets of no more than $20,000 or 20% of the home price (whichever is greater), and meet the lender's credit requirements. Homes must be priced under the caps for the county in which they're located, which range from $297,000 to $350,000 as of Jan. 1, 2023.
Home buyers must contribute a minimum of $1,000 toward their home purchase. The down payment assistance is structured as an interest-free loan with no payments -- home buyers don't have to pay anything back until they sell the home or refinance their mortgage.
Read more: Best mortgage lenders for first-time home buyers
Still have questions?
Here are some other questions we've answered: