Mortgage Calculator
Our mortgage calculator helps you understand your monthly payments, total interest paid over the life of the loan, and how different rates and terms affect your costs.
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Calculator
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Formula
M = P[r(1+r)^n] / [(1+r)^n - 1]
M is the monthly payment, P is the principal loan amount (home price minus down payment), r is the monthly interest rate (annual rate divided by 12), and n is the total number of payments (years × 12). This formula assumes a fixed-rate, fully amortizing loan.
How to use the Mortgage Calculator
- 1
Enter your home price
Value should be in $.
- 2
Enter your down payment
Value should be in $.
- 3
Enter your annual interest rate
Value should be in %.
- 4
Enter your loan term
- 5
Enter your annual property tax
Value should be in $.
- 6
Enter your annual home insurance
Value should be in $.
- 7
Read your results instantly
Results update in real time as you type.
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Understanding your mortgage payment
Your monthly mortgage payment has two core components: principal and interest (P&I). Early in the loan, the vast majority of each payment goes to interest. Over time, more goes toward principal. This gradual shift is called amortization.
For a $320,000 loan at 7.5% over 30 years, the first monthly payment of about $2,238 includes roughly $2,000 in interest and only $238 in principal reduction. By year 25, that same payment includes about $1,200 in principal.
The true cost of a 30 vs. 15-year mortgage
On a $320,000 loan at 7.5%, a 30-year mortgage costs $2,238/month and $485,670 in total interest. A 15-year mortgage costs $2,963/month — but only $213,340 in total interest, saving you over $272,000.
The higher monthly payment is only 32% more, but the total savings are enormous. The right choice depends on your cash flow needs and investment alternatives for the difference.
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Down payment and its impact
A larger down payment reduces your loan amount, lowers your monthly payment, and may help you avoid Private Mortgage Insurance (PMI), which lenders typically require when the down payment is less than 20%.
PMI usually costs 0.5–1.5% of the loan annually — on a $300,000 loan, that's $1,500–$4,500 per year added to your costs until you reach 20% equity.
Fixed vs. adjustable rate mortgages
A fixed-rate mortgage locks your interest rate for the entire loan term — predictable, stable, ideal if you plan to stay long-term. An adjustable-rate mortgage (ARM) offers a lower initial rate that adjusts after a set period (e.g., 5 years for a 5/1 ARM).
ARMs can save money if you plan to sell or refinance before the adjustment period, but they carry risk if rates rise significantly.
Tips & Insights
Make one extra payment per year
Making one extra principal payment annually on a 30-year mortgage can cut 4-5 years off the loan and save tens of thousands in interest — without refinancing.
Points can lower your rate
Mortgage points (prepaid interest) cost 1% of the loan each and typically lower your rate by 0.25%. If you stay in the home long enough, the upfront cost pays off.
Shop at least 3 lenders
Research from the CFPB shows that getting quotes from multiple lenders can save borrowers $1,500–$3,000 over the life of the loan due to rate and fee differences.
Worked Examples
First-time homebuyer
Monthly P&I payment of approximately $2,127, with $35,000 down. Expect to pay PMI until reaching 20% equity (~$70,000). Total interest over 30 years: ~$415,000.
15-year vs. 30-year comparison
30-year monthly payment: ~$1,996, total interest: ~$418,500. 15-year monthly payment: ~$2,696, total interest: ~$185,200. The 15-year saves $233,000 in interest for $700 more per month.
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Frequently Asked Questions
What is included in a mortgage payment?
A typical mortgage payment includes principal (loan repayment), interest, property taxes, and homeowner's insurance — often abbreviated as PITI.
Should I get a 15 or 30-year mortgage?
A 15-year mortgage has higher monthly payments but you pay significantly less interest overall. A 30-year mortgage has lower monthly payments, giving you more cash flow flexibility.
What is PMI?
Private Mortgage Insurance (PMI) is required when your down payment is less than 20% of the home's value. It protects the lender if you default and typically costs 0.5–1.5% of the loan annually.
How much house can I afford?
A common guideline is the 28/36 rule: spend no more than 28% of gross monthly income on housing costs and no more than 36% on total debt. Lenders will assess your DTI (debt-to-income ratio) during approval.
What is an escrow account?
An escrow account is managed by your lender to collect and pay property taxes and insurance on your behalf. Your monthly payment includes contributions to escrow so these large bills don't hit you all at once.
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