Posted in: Condos, First time homebuyer tips, Buying a home

Condo loan calculator: How much will my condo really cost?

Condo loan calculator

Considering buying a condo? Because homeownership is one of the largest investments you can make, it’s important to piece together the cost of a condo before buying. Here are insights you can use to calculate your estimated monthly condo costs and to determine if a condo purchase might be the right next step.

I want to calculate my monthly mortgage payment, plus any taxes or fees. How can I do that?

When investing in a condo, it’s smart to think about the monthly mortgage payment as well as other financial components. This free condo mortgage calculator can quickly help you determine your spending plan by anticipating major expenses, including:

  • Down payment
  • Mortgage principal and interest rates
  • Property taxes
  • Homeowner’s insurance
  • Mortgage insurance (dependent on loan terms)
  • HOA fees

How to make the down payment

This is a one-time installment you’ll present when closing on the house. The amount of money put down at closing can help lower your interest rate and how much you pay in monthly principal on your loan. In some scenarios, a larger initial investment can decrease long-term mortgage interest rates and can exclude you from having to pay mortgage insurance to your lender.

Understanding principal and interest rates

Unless you’ll be paying for your condo in cash, your purchase will likely be funded by a mortgage loan, or mortgage.

Mortgage payments are due on a monthly basis. Your payment will comprise the mortgage principal and the mortgage interest.

The principal refers to the amount of money owed to pay off the mortgage loan over time. In other words, your principal balance would be $150,000 if you borrowed $150,000 in your condo mortgage.

The condo interest rate is the amount of money a homebuyer owes their lender as they repay the principal.

With our condo mortgage calculator, you will be able to customize your expenses by:

  • Designing a payment plan through your loan term selections. It is common to repay a loan over the span of 30 years. But if you’d like to pay it off sooner, and can afford to pay more on your condo mortgage, you can consider a shorter loan term.
  • Selecting the interest rate you expect to pay. Keep in mind, this calculator doesn’t know what interest rate you’ll be approved for — you would have to get pre-approved to be certain about this amount.
  • Entering in your anticipated down payment, or the percentage you hope to put down at closing.

Plan ahead for taxes

It’s a good idea to think up front about saving for this expense so you don’t get hit with an annual property tax payment you can’t afford. For this reason, the condo payment calculator makes an estimate of your property taxes.

Consider homeowner’s and mortgage insurance

Some loans require you to pay mortgage insurance as a way to minimize the lender’s risk when approving your loan. You’ll want to include this potential payment into any calculations you make when buying a condo.

When buying a home, your lender may also require that you purchase a homeowner's insurance policy, which can protect your dwelling and possessions from storm damage, theft and more. These policies don’t typically break the bank, but it’s good to add them into your total payment so you aren’t surprised at the closing table.

What about HOA fees?

One of the biggest ways that condos differ from single-family homes is that condo owners pay into their homeowners’ association, or HOA. The HOA is an organization that handles some of the upkeep of the overall complex. Although HOA fees vary by property, they are another monthly cost to keep in mind.

As an interested condo buyer, it is important to include the estimated HOA fee as you calculate your expenses. The “advanced features” on the Edina Realty mortgage calculator can help you budget for these monthly HOA payments.

I understand the anticipated costs for condo ownership. But how can I be financially prepared for the unexpected?

Additional condo ownership expenses to consider include:

  • Special assessments charges
  • Repair and replacement of appliances
  • Utility bills

What are special assessments?

Although HOA fees contribute to routine condo maintenance and reserve funds for larger projects, sometimes special assessments are required to cover unexpected costs.

Depending on the scale of the project, condo owners may be required to pay special assessments as a one-time fee (e.g., to carpet a flooded hallway) or via monthly payments over a longer stretch of time (e.g., to restructure a parking ramp).

When reviewing final documents from the HOA, you can request to see how often past special assessments have been charged at the condo complex. If the number is high, that could signal an unhealthy HOA or a “money pit” complex that requires continuous, expensive repairs in the future.

Can I protect myself against expensive appliance repairs?

Consider the value of your appliances and systems and think about whether a home warranty will help you minimize unexpected repair costs.

Keep in mind that a home warranty for a condo will only cover appliances and systems that you own outright and that are not shared by other condo owners. For example, a home warranty may cover your refrigerator and in-unit washer and dryer, but it wouldn’t cover a central air system used by all owners in a four-unit building.

What utility bills will I be responsible for?

Every condo complex varies when it comes to utilities. Some may use a portion of the monthly HOA fees to cover trash and water bills, while others may require that condo unit owners pay all of their own utility bills.

To determine the cost and coverage of your condo HOA fees and the potential cost of your monthly utility bills, ask the HOA what utility bills they cover.

Homeownership is expensive. Is it really smart to buy?

You may be wondering — with all of these expenses, is a condo the right financial investment for me? Are the costs worth it?

Remember, if you don’t choose to buy a home and make mortgage payments, you’ll still be paying rising rental costs. Paying monthly rent will, of course, never end in property ownership, so the thousands of dollars you spend on payments don’t end up benefiting you.

Furthermore, according to the Federal Reserve’s Survey of Consumer Finances, which was last conducted in 2016, the average net worth of the American homeowner is $231,400 — while the average net worth of Americans who don’t own homes is $5,200.

By purchasing a home, you will be responsible for keeping up with monthly payments and paying for expenses that your landlord would have previously covered. But, you’ll also have the benefit of building equity in a property that can act as a nest egg over time.

If property ownership, increasing your net worth and creating equity are of interest to you — then yes — investing in a condo may the right decision.

Key points and next steps

Getting a mortgage is a big decision, but there are ways to make it less complicated. Use the condo mortgage calculator to estimate costs associated with your down payment, principal, interest rates, taxes, insurance and HOA fees.

Are you ready to consider homeownership or the financial logistics of purchasing a condo? Reach out to Edina Realty’s customer care team; they can connect you with an expert seven days a week.

Additional resources to consider:

What should I spend on a mortgage payment?
Mortgage advantages for first-time buyers
How condo loans work
Will my down payment impact interest rates?

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