Whether you’re buying a home, paying off debt, planning for retirement, or figuring out your tax bill, this page has straightforward answers to the most common financial math questions — each with a link to the free calculator that does the work for you.
Mortgage & Home Buying FAQ
How do I calculate my monthly mortgage payment?
Your monthly mortgage payment depends on three things: the loan amount (principal), the interest rate, and the loan term (typically 15 or 30 years). The standard formula is M = P x [r(1+r)^n] / [(1+r)^n – 1], where r is the monthly interest rate and n is the total number of payments. A $300,000 loan at 7% for 30 years results in a monthly payment of about $1,996 for principal and interest. Your actual payment will be higher once property taxes, homeowner’s insurance, and PMI are added. A good rule of thumb: every $100,000 borrowed at 7% costs roughly $665 per month.
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How much house can I afford on my salary?
The standard guideline is the 28/36 rule: your monthly mortgage payment should not exceed 28% of your gross monthly income, and your total debt payments (including mortgage) should not exceed 36% of gross income. On an $80,000/year salary ($6,667/month gross), that means a maximum mortgage payment of about $1,867/month, which translates to roughly a $280,000 loan at 7%. Lenders also consider your credit score, down payment size, and existing debts. A larger down payment or lower existing debts can significantly increase what you qualify for.
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What is a good debt-to-income ratio for a mortgage?
Your debt-to-income (DTI) ratio is total monthly debt payments divided by gross monthly income. Most conventional lenders want a front-end DTI (mortgage only) below 28% and a back-end DTI (all debts) below 43%. FHA loans may allow up to 50% with compensating factors. For the best mortgage rates, aim for a total DTI under 36%. For example, if you earn $6,000/month and have $400 in existing car payments, lenders will typically cap your mortgage payment at around $1,760 to keep total debts under 36%.
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How much do I need for a down payment?
The minimum down payment depends on the loan type. Conventional loans require as little as 3% down; FHA loans require 3.5% with a 580+ credit score. VA and USDA loans offer 0% down for qualifying borrowers. Putting down less than 20% on a conventional loan triggers PMI (private mortgage insurance), which typically costs 0.5%–1.5% of the loan amount annually. On a $400,000 home, a 20% down payment ($80,000) eliminates PMI and lowers your monthly payment substantially compared to smaller down payments.
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When does refinancing make sense?
Refinancing makes financial sense when you can lower your interest rate by at least 0.5%–1%, plan to stay in the home long enough to recoup closing costs, or want to switch from an adjustable-rate to a fixed-rate mortgage. The break-even point is calculated by dividing closing costs by your monthly savings. If refinancing costs $4,000 and saves $200/month, your break-even is 20 months. If you plan to stay in the home longer than 20 months, refinancing is worthwhile. Refinancing to a shorter term can save tens of thousands in interest even at a similar rate.
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Loans & Credit FAQ
What is APR and how is it different from interest rate?
The interest rate is the base cost of borrowing money, expressed as a percentage of the loan. APR (Annual Percentage Rate) includes the interest rate plus additional fees and costs such as origination fees, mortgage points, and certain closing costs — giving you the true annual cost of the loan. A mortgage with a 6.8% interest rate might carry a 7.1% APR once fees are included. When comparing loan offers, always compare APRs rather than just the stated interest rates, as a lower rate with high fees can cost more than a slightly higher rate with no fees.
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How long will it take to pay off my credit card?
Credit card payoff time depends on your balance, interest rate, and monthly payment. If you only make minimum payments (typically 1%–2% of the balance), a $5,000 balance at 22% APR can take over 20 years and cost more than $8,000 in interest. Increasing your payment even modestly has a dramatic effect: paying $200/month instead of a $100 minimum cuts payoff time roughly in half and saves thousands in interest charges. Credit card interest compounds daily, so every extra dollar paid reduces future interest substantially. Always pay more than the minimum whenever your budget allows.
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What is a good credit score to get a loan?
Credit scores range from 300 to 850. For conventional mortgages, most lenders require a minimum score of 620, but 740+ gets you the best available rates. FHA loans accept scores as low as 580 with 3.5% down, or 500 with 10% down. For auto loans, a score of 670+ typically qualifies for competitive rates; below 600 often means subprime rates that can exceed 15%. For personal loans, scores above 700 unlock competitive rates. Improving your score from 680 to 740 on a $300,000 mortgage could save $50–$100 per month — roughly $18,000–$36,000 over the full 30-year term.
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How do I calculate my debt-to-income ratio?
Your DTI ratio equals total monthly debt payments divided by gross monthly income, multiplied by 100. Monthly debts include: minimum credit card payments, auto loan payments, student loan payments, mortgage or rent, and any other recurring debt obligations. Example: $1,800 mortgage + $350 car payment + $200 student loans = $2,350 total. At $7,000 gross monthly income, your DTI is 2,350 / 7,000 = 33.6%. Under 36% is considered healthy; under 43% is the typical maximum for mortgage approval. Utilities, groceries, and subscriptions are not included in DTI calculations.
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Savings & Investment FAQ
How does compound interest work?
Compound interest means you earn interest on your principal and on the interest already accumulated — creating exponential growth over time. The formula is A = P x (1 + r/n)^(nt), where P is principal, r is annual rate, n is compounding frequency, and t is years. A practical example: $10,000 at 7% compounded annually becomes $19,672 after 10 years and $76,123 after 30 years. The same amount with simple interest at 7% would only reach $17,000 after 10 years. The longer the time horizon, the more dramatic the difference — starting to invest just 5 years earlier can mean tens of thousands more at retirement.
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How much should I have in my 401k by age?
A widely used benchmark from Fidelity suggests: 1x your salary saved by age 30, 3x by 40, 6x by 50, 8x by 60, and 10x by 67. On a $70,000 salary, that means $70,000 by 30, $210,000 by 40, and $420,000 by 50. Starting later simply means contributing a higher percentage going forward. The 2025 401(k) contribution limit is $23,500 ($31,000 if you’re 50 or older with catch-up contributions). The single most important step is always contributing at least enough to capture your full employer match — that match represents an immediate 50%–100% return on your contribution.
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What is a good net worth by age?
Net worth is total assets minus total liabilities. According to Federal Reserve data, median U.S. net worth by age is roughly: under 35: $39,000; ages 35–44: $135,000; ages 45–54: $247,000; ages 55–64: $365,000; ages 65–74: $410,000. These are medians — averages are much higher because the ultra-wealthy skew the data. A practical target: net worth equal to 1x your annual income by 35, 3x by 45, and 7x by 55. The most reliable path to growing net worth is increasing income, eliminating high-interest debt, and consistently investing the difference. Home equity counts as an asset in your net worth calculation.
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How do I calculate return on investment (ROI)?
ROI is calculated as: (Net Profit / Cost of Investment) x 100. If you invested $5,000 and sold for $7,500, your net profit is $2,500, and ROI = (2,500 / 5,000) x 100 = 50%. For time-sensitive comparisons, use annualized ROI, which accounts for the holding period. A 50% return over 5 years equals only about 8.4% annually — less impressive than a 30% return achieved in 1 year. ROI is valuable for comparing investments, evaluating business decisions, and measuring marketing performance. Always account for fees, taxes, and inflation to find the true real return.
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Income & Tax FAQ
How do I calculate self-employment tax?
Self-employment tax covers Social Security (12.4%) and Medicare (2.9%), totaling 15.3% of net self-employment income. Unlike regular employees, self-employed individuals pay both the employer and employee portions. However, you can deduct half of self-employment tax (7.65%) from gross income before calculating federal income tax. For 2025, Social Security tax applies to the first $168,600 of net earnings; Medicare applies to all earnings plus an additional 0.9% surtax above $200,000 for single filers. If you expect to owe $1,000 or more in self-employment tax, make quarterly estimated payments to avoid IRS penalties.
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What percentage of my paycheck goes to taxes?
For most American workers, total paycheck deductions range from 20%–35% depending on income, state, and filing status. The typical breakdown includes: federal income tax (10%–37% based on bracket), Social Security (6.2%), Medicare (1.45%), and state income tax (0% in 9 states, up to 13.3% in California). On a $5,000/month gross income as a single filer in California, total deductions are roughly $1,119/month — about 22% of gross pay. In Texas (no state income tax), the same salary keeps more per month. The effective federal tax rate for most middle-income earners is 12%–22%, significantly below the top marginal bracket rate.
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How do I calculate overtime pay?
Under the Fair Labor Standards Act (FLSA), overtime is paid at 1.5x (time-and-a-half) your regular hourly rate for all hours worked beyond 40 in a workweek. To calculate: multiply your hourly rate by 1.5, then multiply by overtime hours. Example at $20/hour working 50 hours: regular pay = 40 x $20 = $800; overtime = 10 x $30 = $300; total = $1,100. For salaried non-exempt employees, calculate the hourly equivalent (annual salary / 52 / 40) first, then apply 1.5x. Some states such as California have daily overtime rules requiring overtime pay for hours beyond 8 in a single day regardless of weekly total.
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What is my take-home pay after taxes?
Your take-home pay (net pay) is gross salary minus federal income tax, state income tax, Social Security (6.2%), and Medicare (1.45%). A single filer earning $60,000/year in a state with no income tax takes home approximately $48,000–$49,000 annually, or about $4,000/month. In a high-tax state like California, the same salary yields roughly $44,000–$45,000/year. Pre-tax deductions like 401(k) contributions and health insurance premiums reduce your net pay further but also lower your taxable income. Use a state-specific paycheck calculator to get a precise breakdown based on your exact state, filing status, and withholding elections.
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