The Price Point Reality Check
This is the exact formula Chuma walks buyers through before they ever talk to a lender — a quick, honest way to turn “I want my payment to be around $X” into a ballpark price point. It is not a pre-qualification or a pre-approval. It’s a reality check: the same amortization math lenders use, in your hands, so your first conversation with a lender starts from a number that actually makes sense.
How the Formula Works
Six steps, done by hand or walked through together in a consultation. The calculator below automates the math — but understanding it is the whole point.
Pick Your Target Payment
Before anything else: what do you want your monthly mortgage payment to be? Not what a lender says you qualify for — what you’re actually comfortable paying every month. This is the number the whole exercise is built around.
Find Today’s Rate — on Google.com Only
Search Google for the current national average 30-year (or 15-year) fixed mortgage rate. Use Google.com specifically — it keeps the number current and consistent, rather than pulling a stale or lender-specific quote from somewhere else.
Rates move daily. Always use today’s number, not one from last week.
Find Your Factor on the Chart
Locate that interest rate in the first column of the amortization factor chart below, then read across to your loan term — 15-year or 30-year. That number is your factor: the monthly payment for every $1,000 you borrow at that rate and term.
Run the Math
Divide your target payment by the factor, then multiply by 1,000. That gives you an estimated loan amount.
$2,000 ÷ 6.66 × 1,000 = $300,300
Remember: That Number Is Principal & Interest Only
The $300,300 above covers your loan payment — principal and interest. It does not include property taxes, homeowners insurance, or (if applicable) HOA dues. A full mortgage payment is almost always referred to as PITI:
Many loans also roll in HOA dues (if the home has them) and sometimes mortgage insurance (PMI) on lower down payments. Those add to the total too.
Layer In Taxes & Insurance to Find Your True Price Point
Here’s the real reality check: if $2,000 is the total you want to pay every month — not just principal and interest — then taxes and insurance have to come out of that $2,000, not be added on top of it. So we work backward: estimate monthly taxes and insurance first, subtract them from your target payment, and run the Step 4 math on what’s left. The resulting price point is almost always lower than the Step 4 number — and it’s the more honest one.
If you already have a specific address in mind, Chuma can pull the exact tax record for that property instead of estimating. Without an address, we use a reasonable local estimate.
The Amortization Factor Chart
Monthly payment per $1,000 financed, by interest rate and loan term. This is the exact chart used in Step 3 — the calculator below looks it up automatically, but it’s here for reference.
| Rate | 15 Yr. | 30 Yr. |
|---|
| Rate | 15 Yr. | 30 Yr. |
|---|
Run Your Own Numbers
Start with your target payment and today’s rate. Then add a tax and insurance estimate to see your true, PITI-adjusted price point — not just the principal & interest number.
Press “Run the Reality Check” to see your numbers.
Same target payment and rate — three different cost-of-ownership assumptions, to show how much your true price point can shift.
| Scenario | Tax Rate | Insurance / yr | Price Point |
|---|
Ready to Turn This Into a Real Number?
This tool gets you in the right neighborhood. A quick conversation gets you the rest of the way — your real tax estimate, a lender referral, and next steps.
Back to Buyer Resources