Frequently Asked Questions
Monthly payment M = P × [r(1+r)ⁿ] / [(1+r)ⁿ − 1], where P is the loan principal (home price minus down payment), r is the monthly interest rate (annual rate ÷ 12), and n is the total number of payments (loan term in years × 12).
An amortization schedule shows how each monthly payment is split between interest and principal. In the early years, most of each payment goes to interest. As the balance decreases, more of each payment goes toward the principal, building equity faster over time.
Private Mortgage Insurance (PMI) is typically required when your down payment is less than 20% of the home price. It protects the lender against default. PMI usually costs 0.5%–1.5% of the loan amount per year and can be cancelled once you reach 20% equity (either through payments or appreciation).