Minnesota Mortgage Calculator

Best mortgage lenders in Minnesota

The most popular mortgage lenders in Minnesota operate nationwide. These include such recognizable names as Rocket Mortgage, Change Home Mortgage, AmeriSave. Several lesser known but trustworthy options include Minnesota-based Minnesota Residential Mortgage Inc, First Class Mortgage Inc.

How to calculate mortgage payment in Minnesota

Try our quick calculator MN to evaluate your future monthly expenses. We'll break down the details step-by-step below.

Why and How to Use Our Mortgage Calculator

Use our house payment calculator Minnesota for thorough planning of your future spendings. Let’s take a closer look at each field in order to gain a better understanding of the mortgage in Minnesota parameters.

The initial puzzle piece to consider is the home price – this represents the amount you intend to invest in your future property. The down payment, a portion of this price, is the sum you need to pay upfront. To avoid costly insurance, it's crucial to come up with a minimum of 20% down payment for a conventional loan. The remaining portion constitutes the principal, which is typically 80% of the home price when a 20% down payment is made.

The loan term signifies the period during which you will fully repay your mortgage through scheduled payments. Fixed-rate conforming loans typically have a maximum term of 30 years, while adjustable-rate options usually come with shorter terms.

The interest rate is a fixed or variable percentage of the principal that you are obligated to pay over the loan's duration. It's important to note that you are actually assessed an annual percentage rate (APR), which is not identical to the interest rate. While the interest rate constitutes the majority of the APR, the latter also encompasses various fees such as origination fees, closing costs, and insurance payments.

To provide a more precise assessment, the interest rate used for these calculations is determined based on the current mortgage rates in Minnesota, considering a $400,000 home price and a 10% down payment.

Median property taxes in Minnesota counties

Property tax is another crucial factor to consider when selecting your future home. Many lenders insist on setting up a mortgage escrow account to ensure that the borrower keeps up with tax and insurance costs.

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

Minnesota Housing Market 2024

Over the past year, there has been a significant rise in the housing market's value in Minnesota, which is in line with a long-established trend that was further accelerated by the COVID pandemic. However, it's worth noting that the rate of growth has slowed compared to the previous year, and both purchase and refinance rates have been steadily climbing, with expectations of further increases in the near future.

How do I calculate my mortgage payment?

The most user-friendly approach to achieve this is by utilizing our calculator, which operates on a straightforward formula. You can also manually compute the amount to be paid using the same formula:

M = P*i(1 + i)^n / (1 + i)^n – 1

M – estimated monthly mortgage payment;

P – principal;

I – monthly interest rate (to determine it, 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 6.99% APR (which is .0699 as a unit fraction). The house costs $500k, with 10% ($50,000) to be paid down. The principal amount (P) will be equal to 90% of the initial home cost ($500,000 – $50,000 = $450,000).

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

Finally, 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.

So, you are going to pay about $4042 a month.

It is important to note that the calculated M value is approximate, as no extra fees are taken into account.

Tips for first-time home buyers in Minnesota

To begin, there exist several federal agencies (such as USDA, FHA, and VA) that provide loan guarantees to specific borrowers, offering many options that align with the budgets of first-time homebuyers.

In addition to these government-backed programs, it's worthwhile to explore opportunities provided by UHC (Minnesota Housing Corporation) for residents of Minnesota. Specifically, first-time homebuyers meeting the qualifications for an FHA loan with a minimum FICO score of 660 can apply for the FirstHome program. This program provides assistance with down payments and closing costs, covering up to 6% of the loan amount. It's important to note that this assistance is in the form of a 30-year-fixed-rate second loan. If you do not meet the requirements for the FirstHome program, there's another option: the Minnesota Housing Score Loan, which offers coverage of up to 4% and requires a minimum credit score of 620.

Here are some valuable tips for those embarking on their first homebuying journey:

1. Obtain pre-approval in advance. This enhances your credibility in the eyes of potential home sellers. It's advisable to obtain pre-approval letters from multiple lenders, ideally two or three.
2. Compare various mortgage rates by considering at least three different lenders. The more options you explore, the better your chances of finding the most favorable rate.
3. Conduct preliminary calculations based on your pre-approved amount to plan your future expenses effectively.
4. Save as much as possible for your down payment, and start saving early. A larger down payment reduces the principal amount, potentially lowering your overall expenses. Therefore, it's crucial to begin saving well in advance.
5. If you are eligible for a VA loan, consider this as your primary option.
6. Explore government-backed programs and local assistance initiatives. These programs may present enticing opportunities, so it's important not to overlook them.
7. Whenever possible, work on paying off any existing debts to improve your financial standing.