California Mortgage Calculator

California Mortgage Calculator

Purchasing a home in California can be a significant milestone, especially for low to average-income individuals. With the soaring housing prices in various parts of California and the United States, a mortgage becomes a vital financial tool for many prospective home buyers. To help you navigate through the complex process, we provide an innovative California Mortgage Calculator, designed to assess your potential expenses accurately. Our calculator empowers you to make informed decisions by calculating mortgage payments, interest rates, and loan terms specific to the California housing market. In addition, we address commonly asked questions related to buying a house in California, keeping you up-to-date with the latest information

Best mortgage lenders in California

The highly sought-after mortgage providers in California function across the entire country. These encompass well-known brands like Rocket Mortgage, Homenda Mortgage, First Citizens Bank, and AmeriSave. Additionally, several reliable alternatives may not be as widely recognized, such as OneTrust Home Loans, Bay Equity LLC.

How to calculate mortgage payment in California

Utilize our rapid and uncomplicated CA mortgage calculator to assess your prospective monthly costs. A comprehensive guide with clear instructions can be found below.

Why and How to Use Our Mortgage Calculator

Utilize our California Mortgage Calculator to plan your forthcoming expenditures. Let’s take a closer look at each field in order to gain a better understanding of the mortgage in California.

The primary component of the puzzle is the dwelling cost – the amount you intend to allocate toward your upcoming property. An initial payment is the segment of this cost to be paid in advance. To evade exorbitant insurance charges, you must come up with a minimum of 20% down (in the case of a traditional loan). The remaining sum constitutes the principal (e.g., 80% of the dwelling cost given a 20% down payment).

A loan duration denotes the period required for complete repayment of your mortgage through regular payments. Fixed-rate conforming loans typically have a maximum duration of 30 years, while adjustable-rate alternatives usually offer shorter terms.

An interest rate represents a fixed or fluctuating fraction of the principal that you must remunerate over the loan's duration. It is important to note that you are levied an annual percentage rate (commonly abbreviated as APR), which is not precisely identical to the interest rate. Although the interest rate forms the majority of the APR value, the latter also encompasses various fees (e.g., origination fee, closing costs, insurance payments, etc.).

For a more precise evaluation, the interest rate employed for these computations is based on the current mortgage rates in California, assuming a home price of $400,000 and a down payment of 10%.

California Housing Market 2023

Over the past year, there has been a significant surge in the market worth of real estate in California. This ongoing trend has been magnified by the impact of the COVID pandemic. However, the rate of expansion has slowed down compared to the previous year, while both acquisition and refinancing rates have been progressively rising and are anticipated to increase further in the foreseeable future.

Median property taxes in California counties

The property tax is another important thing to consider when selecting your future house. Many lenders insist on setting up a mortgage escrow account to ensure the borrower’s keeping up with the tax and insurance costs.

Source: American Communities Survey 2016, U.S. Census

How do I calculate my mortgage payment?

Our calculator employs a simple formula, which you can utilize to determine the sum to be paid manually:

M = P * i(1 + i)^n / (1 + i)^n – 1

M – estimated monthly mortgage payment;

P – principal;

I – monthly interest rate (to ascertain this, divide your annual mortgage rate by 12);

N – the loan term expressed in months (in other words, the overall number of monthly payments)

Imagine you are applying for a 15-year mortgage loan with a fixed APR of 6.99% (which is equivalent to .0699 as a unit fraction). The cost of the house is $500k, with 10% ($50,000) to be paid as a down payment. In this case, the principal amount (P) would be 90% of the initial home cost ($500,000 – $50,000 = $450,000).

I = .0699% / 12 = .005825%.

Lastly, let’s convert the loan length from years to months: N = 15 * 12 = 180.

M ($) = 450,000 * .005825(1 + .005825)^180 / (1 + .005825)^180 – 1 ≈ 4042.

Thus, you can expect to pay approximately $4042 per month.

It is important to emphasize that the calculated M value is only an approximation, as it does not take into account any additional fees.

Tips for first-time home buyers in California

To begin with, there are various federal agencies (USDA, FHA, and VA) that ensure loans for eligible borrowers. Numerous first-time homebuyers can discover choices that best suit their budget.

Apart from these government-guaranteed initiatives, it is worthwhile to consider some offerings from UHC (California Housing Corporation) accessible to residents of California. Specifically, first-time homebuyers have the opportunity to apply for FirstHome – a program that provides assistance with down payments and closing costs, if they meet the requirements for an FHA loan and have a FICO score of at least 660. This alternative covers up to 6% of the loan amount towards the down payment and/or the closing expenses. It's crucial to note that this option is available solely as a 30-year fixed-rate second loan.

If you don't qualify for the FirstHome program, there's no need to lose hope. California Housing Score Loan presents an alternative program that covers up to 4%. The minimum acceptable credit score required is 620.

For first-time homebuyers, here are some valuable tips:

1. Obtain pre-approval in advance. This step will enhance your creditworthiness in the eyes of home sellers. It is highly advisable to acquire the pre-approval letters from not just one, but a minimum of two or three different lenders.
2. Compare diverse mortgage rates. Select at least three lenders. The more, the preferable.
3. Strategize your future expenses.
4. Allocate funds for a down payment to the maximum extent possible – and as early as possible. The down payment will diminish the principal amount, which, consequently, can decrease your potential expenses. Hence, it is crucial to commence saving in advance.
5. If you qualify for a VA loan, prioritize this alternative above all else.
6. Evaluate government-backed schemes, along with local assistance programs. There might be enticing offers – ensure you don't miss out.
7. Repay prior debts, if possible.