Make the numbers fit your life.

How much cash do I need besides the down payment?

Budget for closing costs and prepaids, moving and setup, immediate repairs, and a reserve that remains after closing. These are separate from the down payment; avoid counting a cost twice.

Fictional example: a $300,000 home with 10% down requires $30,000 for the down payment. Add $12,000 closing costs and prepaids, $5,000 moving and setup, $8,000 immediate repairs and $10,000 retained reserves. That is another $35,000, or $65,000 total cash earmarked for the purchase and cushion. The reserve is not a fee paid at closing.

Can I roll closing costs into the loan?

It depends on the loan and transaction. Do not assume a purchase loan will finance every cost. Seller credits can reduce eligible buyer costs within program limits. Lender credits can reduce upfront cash in exchange for a higher rate. Neither makes the cost disappear. Compare the Loan Estimate and Closing Disclosure, including credits and deposits already paid.

CFPB Closing Disclosure guide · CFPB explanation of lender credits

Does the interest rate matter more than the home price?

It depends on the size of each change. A rate change can have a large effect, but there is no universal ranking. Hold the down-payment percentage and term constant to compare like with like.

• $300,000 price, 10% down, 30 years at 6%: $1,619 monthly principal and interest.
• Same home and down payment at 7%: $1,796.
• $330,000 price, 10% down, 30 years at 6%: $1,781.

These exclude taxes, insurance, mortgage insurance and upkeep. The higher-price case also needs a larger down payment. Test all of those costs, not just the loan payment.

What does one extra mortgage payment each year do?

Extra principal reduces the balance on which future interest accrues. With an unchanged scheduled payment, this can shorten payoff time and reduce total interest. Spreading the same extra budget monthly usually saves more than waiting until year end at a positive interest rate.

Use the calculator’s extra-payment table to compare your loan. It assumes a fixed rate and no prepayment penalty. Extra means principal and interest, not an extra escrow payment.

Which home gives me more of what matters?

A lower payment does not settle questions about commute, condition, space or priorities. Use Baily’s Buying Compass to make your preferences explicit and compare personal fit with asking price. It is not a market appraisal.

Practice or take it to paper

Free mortgage activity and teacher guide · Free teacher starter kit