Mortgage Calculator
How to Use This Calculator
Start with the home price and your down payment. The calculator shows your down payment percentage and auto-flags when PMI might apply (below 20% down). Enter the interest rate from your lender’s quote and choose your loan term — 30-year is the most common, but 15-year mortgages carry lower rates and save substantially on interest.
The optional fields let you build a complete picture. Property tax, homeowners insurance, PMI, and HOA fees are all added to your monthly total so you see the real cost of owning the home — not just the loan payment. The extra monthly payment field shows you how paying even $100–200 extra per month can shave years off your mortgage and save tens of thousands in interest.
The Mortgage Payment Formula
Where P is the loan principal (home price minus down payment), r is the monthly interest rate (annual rate ÷ 12), and n is the total number of payments (term in years × 12). This formula calculates the fixed monthly payment that fully amortizes the loan over the term.
30-Year vs. 15-Year Mortgage
The two most popular mortgage terms have very different cost profiles. Here’s how they compare on a $320,000 loan:
| Factor | 30-Year at 6.5% | 15-Year at 5.9% |
|---|---|---|
| Monthly P&I | $2,023 | $2,687 |
| Total Interest Paid | $408,280 | $163,660 |
| Total Cost | $728,280 | $483,660 |
| Interest as % of Loan | 127.6% | 51.1% |
The 15-year mortgage costs $664/month more — but saves $244,620 in interest over the life of the loan. If your budget can handle the higher payment, a shorter term is one of the most powerful financial moves in homeownership. For a deeper dive, see Fixed vs. Adjustable Rate mortgages.
How Extra Payments Save You Money
You don’t need to refinance to pay off your mortgage faster. Even modest extra payments toward principal have an outsized effect because they reduce the balance that future interest is calculated on. On a $320,000 loan at 6.5% for 30 years:
| Extra Monthly Payment | Years Saved | Interest Saved | Actual Payoff |
|---|---|---|---|
| $0 | — | — | 30 years |
| $100 | 3.5 years | $56,000 | 26.5 years |
| $250 | 7.2 years | $116,000 | 22.8 years |
| $500 | 11.3 years | $180,000 | 18.7 years |
| $1,000 | 16.1 years | $253,000 | 13.9 years |
$250/month extra saves you over $116K and chops 7 years off the loan. Use the extra payment field above to model your own scenario.
Understanding Amortization
In the early years of a mortgage, most of your payment goes to interest — very little reduces the principal. This gradually flips over time as the balance shrinks. This pattern is called amortization, and the schedule above shows exactly how it plays out year by year.
On a 30-year, $320,000 loan at 6.5%, your first monthly payment of $2,023 breaks down as roughly $1,733 interest and just $290 principal. By year 15, it’s about $1,100 interest and $923 principal. By year 25, almost all of the payment goes to principal. Check our Mortgage Formulas Cheat Sheet for the math behind this, or see a month-by-month view in the Loan Amortization Calculator.
What’s Included in Your Monthly Payment?
Lenders often refer to PITI — the four components of your monthly housing cost:
| Component | What It Covers | Typical Range |
|---|---|---|
| Principal | Pays down loan balance | Varies by amortization |
| Interest | Cost of borrowing | Set by rate & balance |
| Taxes | Property tax (escrowed) | 0.5%–2.5% of home value/yr |
| Insurance | Homeowners coverage | $1,200–$3,000/yr |
If your down payment is less than 20%, you’ll also pay PMI (Private Mortgage Insurance), which typically adds 0.5–1% of the loan amount per year to your monthly cost. PMI drops off once you reach 20% equity. See our Down Payment Guide for strategies to avoid it.
How Much House Can You Afford?
28/36 Rule: Your total housing payment (PITI) shouldn’t exceed 28% of gross monthly income. Total debt payments (housing + car + student loans + credit cards) should stay under 36%. This is the standard lenders use.
Conservative approach: Aim for a home that’s 2.5–3× your annual household income. On a $100K income, that’s a $250K–$300K home.
For a personalized analysis, see our guide on How Much House Can I Afford? or compare owning vs. renting with the Rent vs. Buy Calculator.
Related Tools
| Tool | Best For |
|---|---|
| Loan Amortization Calculator | Month-by-month amortization for any loan |
| Rent vs. Buy Calculator | Comparing long-term cost of renting vs. buying |
| Compound Interest Calculator | Seeing how investing your down payment could grow instead |
| Debt Payoff Calculator | Optimizing payoff across multiple debts |
| Inflation Calculator | Understanding how home values appreciate over time |
Frequently Asked Questions
How is the monthly mortgage payment calculated?
The standard mortgage formula calculates a fixed payment that fully pays off the loan over the term. It accounts for the fact that interest accrues on a declining balance, so the payment stays the same but the split between principal and interest shifts over time. This is called amortization.
What interest rate should I enter?
Enter the annual interest rate from your lender’s quote or pre-approval letter. This is the note rate (not the APR, which includes fees). If you’re just exploring, current average 30-year fixed rates are a good starting point — search “average mortgage rates today” for the latest number.
What’s the difference between interest rate and APR?
The interest rate is the cost of borrowing the principal. The APR (Annual Percentage Rate) includes the interest rate plus lender fees, points, and other costs spread over the loan life. APR is always higher than the rate and is better for comparing offers between lenders.
Should I put 20% down?
Putting 20% down avoids PMI, which saves hundreds per month. However, it’s not always optimal — if it drains your emergency fund or prevents you from investing elsewhere at higher returns, a smaller down payment might make sense. See our Down Payment Guide for the full analysis.
How do extra payments work?
Extra payments go directly toward reducing principal. Since interest is calculated on the remaining balance, every extra dollar reduces future interest charges and shortens the loan. Even $100/month extra on a 30-year mortgage can save $50,000+ in interest and cut several years off the term.
Does this calculator include taxes and insurance?
Yes. Enter your annual property tax and homeowner’s insurance in the optional fields. The calculator adds these to your monthly total and includes them in the payment breakdown bar. PMI and HOA fees are also supported.
What is PMI and when do I need it?
Private Mortgage Insurance is required by most lenders when your down payment is less than 20% of the home price. It protects the lender (not you) if you default. PMI typically costs 0.5–1% of the loan amount per year and can be removed once you reach 20% equity.
Is a 15-year mortgage always better?
A 15-year mortgage saves dramatically on interest and usually comes with a lower rate. But the higher monthly payment reduces your flexibility. If you can invest the difference at a return higher than your mortgage rate, a 30-year loan with disciplined investing may build more wealth. The right choice depends on your risk tolerance and financial goals.
Key Takeaways
- Your mortgage payment is determined by loan amount, interest rate, and term — but the real monthly cost includes taxes, insurance, PMI, and HOA.
- A 15-year mortgage costs more monthly but saves 50%+ on total interest compared to a 30-year loan.
- Extra payments have an outsized impact — even $100–250/month extra can save six figures in interest and shave years off your loan.
- In early years, most of your payment goes to interest, not principal. The amortization schedule shows exactly how this shifts over time.
- 20% down avoids PMI, but weigh this against maintaining an emergency fund and other investment opportunities.
- Use the 28/36 rule as a sanity check: total housing under 28% of gross income, total debt under 36%.