A simple loan for a buyer who wants to buy their first home is now on the market.
It costs just under $5,000 per month, a number that includes mortgage interest and closing costs, the Mortgage Bankers Association says.
For a new buyer who might not be able to get financing from a bank, Fannie Mae has a simpler way to help.
It offers its “loan calculator” that lets people compare different loan amounts to determine what the best option is for them.
The calculator, which was made available to the public last week, uses data from the Federal Housing Finance Agency (FHFA) and the National Association of Realtors to calculate how much it will cost to purchase a home.
To qualify for a mortgage, a person needs to have a minimum income and be able “to afford the interest and principal” of the loan, FHFA says.
Fannie and Freddie offer similar mortgage calculators, but they only calculate interest rates for borrowers who already have a mortgage and are able to pay it off in full.
The FHSA has also released data on the average monthly loan payments of Fannie’s borrowers.
According to the FHFS data, borrowers with monthly payments of $100,000 or more make about $8,000 a month on average.
FHFC’s loan calculator is a “more useful tool,” according to Fannie.
The mortgage calculator is more accurate, as it “will show you how much you will pay on a loan versus what you would have to pay in cash, and you will know if the loan is affordable,” FHFI said.
But for people who have not been able to find a lender, the Fannie calculator can be “more accurate and more accessible,” Fannie said.
It’s a good option for people with limited cash or credit, said Richard R. Lunsford, president of the Mortgage Loan Council, a trade group for mortgage lenders.
“It’s a more accurate tool,” he said.
“You’ll know whether the loan or a house is affordable.”
Lunsfield also said the calculator is helpful because it provides a more complete picture of what the average borrower’s monthly payment would be for a loan that includes a down payment, closing costs and other monthly costs.
A home buyer who is considering buying a home should have a good understanding of the mortgage calculator, he said, but Fannie is offering its tool as a free service.
“We don’t want to put any pressure on anyone to use it,” he added.
“If you want to get a loan, you should know what you can afford and you should be able do that.”
Fannie has said that the calculator will be updated to include information on down payment costs.
“The calculator is designed to be a more personalized way to tell the story of a potential purchase,” the FHA said in a statement.
It added that it will “continue to monitor usage and ensure that it is accurate and useful.”
But Fannie didn’t offer any details about what additional information the calculator might provide to borrowers.