You found the place. You are thinking about offering under list, maybe by $10k, and one question keeps coming back. What does that actually do to the monthly payment? That is a fair thing to want to know before you write a number on an offer, and the Purchase tab can answer it for your loan in a few minutes.
The plain answer
Less than people expect. A $10k step comes off the price once, but the loan spreads it across every month of the term. So the monthly change is a small slice of the step, and most of the payment does not move at all.
Only some lines respond. Principal and interest goes down. PMI goes down if the PMI row shows an amount. Tax, insurance, and HOA stay exactly where you typed them. If you were hoping a lower offer would shrink the whole payment in proportion, it will not, and it is better to see that now than after the offer is signed.
What moves and what sits still
Total Monthly Payment at the top is the sum of the lines under it: Principal & Interest, Property Tax, Homeowner's Insurance, the PMI row, and HOA Fees. Here is how each one behaves when you change Home Price and nothing else.
Principal & Interest moves. It comes from Loan Amount, Effective rate, and Loan Term, and Loan Amount starts as Home Price minus Down Payment.
The PMI row moves when it shows an amount. On Conventional it is figured from Loan Amount and from the LTV band you land in. On FHA the row is labeled FHA MIP and works in a similar way. On VA the row reads VA Funding Fee (upfront) and the monthly amount stays at zero, because that fee is paid once and added to Loan Amount instead.
Property Tax does not move. The tool takes your Annual Property Tax and divides it by twelve. Home Price is not part of that math. Homeowner's Insurance is your Annual Insurance divided by twelve, so it sits still too. HOA Fees is Monthly HOA as typed.
Under the payment, Loan Amount, Total Interest, Total Cost, and LTV all respond to the step. Total Cost on this tab is Loan Amount plus Total Interest. It leaves out tax, insurance, and HOA.
Why the tax bill stays put
Some calculators guess property tax as a share of the price, so a lower price shows a lower tax. This one does not guess. Annual Property Tax is a bill you typed, and the tool holds it no matter what Home Price says.
I think that is the right way to hold it. In Chicago the tax bill follows the assessed value, not the price on your contract. Offering a bit under list does not hand the assessor a new number. If you have not settled what goes in that box yet, the earlier post on why the listing tax line is wrong covers it. For this post the rule is narrower: once the tax is typed, leave it alone between runs.
Insurance behaves the same way in real life. A homeowners quote follows what it would cost to rebuild the house, not what you paid for it. HOA is whatever the association charges, whoever buys.
Set up the Purchase tab once
Open the calculator and fill in your own numbers before you touch the price.
- Loan Type: the program you plan to use, Conventional, FHA, or VA.
- Home Price: the list price, for the first run.
- Down Payment: the amount you plan to put in. Use the toggle beside the box to type it in dollars or as a percent. That choice matters here, and there is a section on it below.
- Credit Score and Loan Term: match what your quote was built on.
- Target Closing Date: optional for this. It only sets the Estimated First Payment line.
- Starting rate assumption: the rate from your own quote. BankPricer gives no rate, and whatever sits in that box when the page loads is not yours.
- Monthly HOA, Annual Property Tax, and Annual Insurance: your real bills or quotes.
Run it at list, then step down
With Home Price at list, write down Total Monthly Payment, Effective rate, Principal & Interest, the PMI row, Loan Amount, Total Interest, and LTV.
Now take your $10k off Home Price. Change nothing else. The tab updates as you type, so there is no button to press. Write the same lines down again.
Compare them line by line. Property Tax, Homeowner's Insurance, and HOA Fees should match your first run exactly. If one changed, you typed over it by accident. The drop in Principal & Interest, plus any drop in the PMI row, is what the step does to your month. The drop in Total Interest is what it is worth over the full term, if you keep the loan that long.
Weighing a deeper offer? Step again from the new price and write down a third set. Each step is its own rerun.
Dollar or percent changes the answer
This is the part that trips people up. The Down Payment toggle decides what happens to your down payment when Home Price changes.
In dollar mode, the dollars hold. The whole $10k comes off Loan Amount, and LTV goes down because the same cash now sits against a smaller price. The small helper next to the Down Payment label shows your new percent.
In percent mode, the percent holds. The tool works the dollars out again from the new price, so your down payment shrinks a little with the step. Loan Amount falls by less than the full $10k, and LTV does not change at all. The helper shows your new dollar figure.
Pick the mode that matches your plan. If you have a set amount of cash for the down payment, dollar mode is the honest one. If your plan is a set percent of whatever you end up paying, use percent. Running the step in the wrong mode gives you a real number for a plan you do not have.
When a step can matter more
Most of the time the step moves Principal & Interest a little and that is the whole story. A couple of things can make it bigger, and they show up when LTV moves, which mostly means dollar mode.
PMI has an edge. On Conventional, once LTV is at or under a set line, the PMI row drops to zero and the Note on PMI says it is not required. Above that line, the PMI rate depends on which LTV band you are in, so crossing a band edge can drop the row by more than the smaller loan alone would. If your run at list sits just above one of those edges, the step can shrink the PMI row sharply or make it disappear. On VA, the funding fee depends on how much you put down as a share of price, so a dollar mode step can move you into a lower fee band, and Loan Amount falls by more than the step.
Pricing has bands too. On Conventional, Effective rate is your Starting rate assumption plus a modeled adjustment looked up by Credit Score and LTV. When there is an adjustment, the small text beside Effective rate shows it. A lower LTV can land in a different band and change that adjustment, which nudges Principal & Interest again. FHA and VA get no adjustment on this tab, so Effective rate stays on the rate you typed.
The tab will not warn you that you are near an edge. You find out by comparing the PMI row and Effective rate between your runs. If either one changed, you crossed something. And if your loan is close to the size where the tab shows a high balance or jumbo note, the step can make that note appear or go away.
The lower price lever, measured
The earlier post on closing costs before an offer named the levers you have before you write it: a smaller down payment, a seller credit toward closing costs, or a lower price. This post puts a measurement on the last one.
On this tab, a lower price is the only one of those that lowers the monthly. A smaller down payment raises Loan Amount, so the payment goes up, and you can watch that by lowering Down Payment on the same screen. A seller credit has no field here at all. It works on cash to close, not on the payment.
So when the payment is the thing that has to work, the step you just ran tells you how far a lower price really gets you. Sometimes the monthly change is small enough that the cash side matters more to you. Sometimes it is the other way. Your two runs decide that.
What this does not tell you
It does not tell you whether a seller will take the offer. That is a different conversation, and this post stays out of it.
It does not show cash to close. Down payment, closing costs, and any credits live outside the payment math on this tab.
It does not know the appraisal. Lenders size the loan against the lower of the price and the appraised value, so a low appraisal changes things in a way no price step here can show.
And it does not know your next tax bill. A sale can lead to a new assessment down the road, and that bill may not match what you typed. That is true on both runs, so it does not change the step. It does mean the tax line is an estimate either way.
A second pair of eyes
Bring both runs, the one at list and the one after your step. We can check that the typed lines held still and that Down Payment was in the mode that fits your plan. Then we can look at whether either run sits near a PMI or pricing edge, using your real quote. I work out of Chicago.
A calculator result is not a commitment to lend.
Jeff Shin, NMLS 1041652. Barrett Financial Group, L.L.C. Chicago. Company NMLS 181106. Equal Housing Lender. Not a commitment to lend.