# Table of Contents

- Formula for Mortgage Calculation
- Income Needed for a $400k Mortgage
- Mortgage Payments for a $500k Mortgage
- Buying a Home with a $5000/Month Mortgage Payment

## How to Estimate a Mortgage

Knowing how to estimate a mortgage can help you when planning to buy a home. Estimating a mortgage involves understanding the four components of a mortgage: principal, interest, taxes and insurance. All four components need to be taken into account when estimating a mortgage.

### Formula for Mortgage Calculation

The formula for mortgage calculation is:

**M = P[r(1+r)^n/((1+r)^n)-1)]**

- M = monthly mortgage payment
- P = principal or the amount of the loan
- r = the monthly interest rate (divide the annual interest rate by 12 to get r)
- n = the number of payments over the life of the loan

Using this formula is a good way to estimate a mortgage payment. Keep in mind that this formula does not include taxes and insurance.

### Income Needed for a $400k Mortgage

The amount of income needed for a $400k mortgage depends on several factors, including the interest rate, the amount of the down payment, and the loan term. Generally speaking, lenders require that borrowers have an income of at least three times the total monthly mortgage payment in order to be approved for a loan.

For example, if the interest rate is 4.25%, the down payment is 10%, and the loan term is 30 years, the total monthly mortgage payment would be approximately $1,900. That means the borrower would need to have an income of at least $5,700 per month to qualify for a $400k mortgage.

### Mortgage Payments for a $500k Mortgage

The amount of a mortgage payment for a $500k loan depends on several factors, including the interest rate, the loan term, and the amount of the down payment. Generally speaking, the higher the interest rate, the higher the monthly payment; the longer the loan term, the lower the monthly payment; and the bigger the down payment, the lower the monthly payment.

For example, if the interest rate is 4.25%, the loan term is 30 years, and the down payment is 10%, the total monthly mortgage payment would be approximately $2,375. If the interest rate is 4.75%, the loan term is 15 years, and the down payment is 20%, the total monthly mortgage payment would be approximately $3,700.

### Buying a Home with a $5000/Month Mortgage Payment

If you’re looking to buy a home with a $5000/month mortgage payment, you will need to have an income of at least $15,000/month to be approved for a loan. The amount of the loan you can be approved for will also depend on other factors, including the interest rate, the loan term, and the amount of the down payment.

For example, if the interest rate is 4.25%, the loan term is 30 years, and the down payment is 10%, the total loan amount would be approximately $735,000. If the interest rate is 4.75%, the loan term is 15 years, and the down payment is 20%, the total loan amount would be approximately $521,000.