Last reviewed: July 2026
This page explains exactly how every number in the mortgage calculator is estimated, so you can judge for yourself how much to rely on it. Every automated figure below is also editable directly in the calculator's "complete breakdown" — if you know a better number, use it.
Principal and interest use the standard fixed-rate amortization formula over a 30-year term: M = P × [r(1+r)^n] / [(1+r)^n − 1], where P is the loan amount, r is the monthly interest rate, and n is 360 payments.
We start from a single sample baseline rate for a well-qualified conventional 30-year loan on a primary residence, then adjust it based on your loan type, credit tier, down payment, and how the property will be used. This baseline is a periodically-updated sample, not a live market feed — actual rates move daily and vary by lender. Treat the result as a reasonable starting point, not a quote.
Outside Michigan, we apply a flat national-average effective tax rate (1.1% of home price annually) to the home price. This is a rough approximation — it does not look up your specific municipality, county, or the seller's actual current tax bill.
Michigan properties get a more detailed model. Michigan property tax is calculated as taxable value × total millage ÷ 1000. We estimate taxable value as roughly 50% of the home price (Michigan's constitution caps assessed value at about half of true cash value, and taxable value resets close to that level the year after a sale — see below). For millage, the single biggest factor is whether the home qualifies as your homestead:
The calculator determines homestead status directly from your answer to "how will the property be used?" — primary home counts as homestead, second home and rental don't. Actual millage varies by township, city, and school district (some areas run meaningfully higher or lower than these statewide averages), so this is still an approximation, not a bill from your local treasurer.
Why a buyer's tax bill can jump after closing: under Michigan's Proposal A, a property's taxable value is capped annually while owned by the same person — it can rise only a little each year even if the market value jumps. That cap is removed ("uncapped") the year after a sale, resetting taxable value close to the state equalized value (SEV, roughly half of market value). This is why a buyer's real tax bill is often noticeably different from whatever the seller was paying — never assume the seller's current bill is what you'll owe.
Estimated as a percentage of home price, adjusted upward for rental and second-home use (insurers generally charge more for non-owner-occupied and secondary properties). This does not reflect your home's construction type, claims history, roof age, or any other factor a real insurance quote would consider.
Conventional loans below 20% down use a credit-tier-based annual PMI rate applied to the loan amount, with an added adjustment at higher loan-to-value ratios. FHA loans use a standard annual MIP rate plus an upfront MIP that's typically financed into the loan. VA loans use the published VA funding fee table (first-time-use assumptions) instead of monthly PMI. USDA loans use the standard annual guarantee fee plus an upfront fee. These are simplified versions of each program's real published rate tables.
Lender, title, and related fees are estimated as a percentage of the loan amount, plus a flat appraisal fee and inspection allowance. Prepaid escrow assumes roughly three months of taxes and insurance collected upfront, and prepaid interest assumes roughly 15 days between closing and your first full payment cycle. Real closing costs vary by lender, title company, state, and closing date.
The calculator suggests a starting loan type — Conventional, FHA, VA, or USDA — based on your stated circumstances (first-time buyer, veteran/military, rural property) and down payment. This is a starting point for a conversation with a lender, not an eligibility determination or approval of any kind.
If a number here doesn't look right for your situation, or you'd like help thinking through what it means for a real Michigan home, reach out.