How the Mortgage Calculator Works

This mortgage calculator estimates your monthly payment, total interest paid, and full amortization schedule using the standard fixed-rate formula: M = P[r(1+r)^n] / [(1+r)^n - 1], where P is the principal loan amount, r is the monthly interest rate (annual rate divided by 12), and n is the total number of monthly payments. This is the same formula used by every lender for fixed-rate mortgages.

What Your Payment Includes

The payment calculated here covers principal and interest only. Your actual monthly housing payment will also include property taxes, homeowners insurance, and -- if your down payment is less than 20% -- private mortgage insurance (PMI). Use the principal and interest total here as your baseline and add your estimated taxes and insurance on top.

How Interest Accumulates Over Time

On a fixed-rate mortgage, your monthly payment stays the same throughout the term, but the split between principal and interest shifts dramatically over time. In the early years of a 30-year mortgage, the majority of each payment covers interest. As the balance decreases, more of each payment reduces principal. The amortization schedule shows this shift month by month.

30-Year vs. 15-Year Mortgage

A 30-year mortgage produces a lower monthly payment than a 15-year mortgage on the same loan amount, but the total interest paid is substantially higher. On a $400,000 loan at 7%, a 30-year term produces a monthly payment of approximately $2,661 and total interest of approximately $558,000. The same loan on a 15-year term produces approximately $3,595 per month but total interest of only approximately $247,000.

Frequently Asked Questions

What credit score do I need for a mortgage? Conventional loans typically require a minimum score of 620. FHA loans allow scores as low as 580 with 3.5% down. The higher your score, the lower your rate.

How much house can I afford? A common guideline is that your total housing payment should not exceed 28% of your gross monthly income. Use our affordability guide for a full breakdown.

What is a good mortgage rate? Rates change weekly. Freddie Mac publishes the Primary Mortgage Market Survey (PMMS) each Thursday, the most widely cited benchmark for current 30-year fixed rates.

PMI and Your Total Payment

If your down payment is below 20%, expect private mortgage insurance (PMI) added on top of the principal and interest this calculator shows. PMI typically runs 0.5% to 1.5% of the loan amount per year. On a $332,500 loan (5% down on a $350,000 home), that is roughly $139 to $416 per month until the balance reaches 78% of the original value, at which point PMI cancels automatically under federal law.

Common Mortgage Calculator Mistakes

Treating the principal-and-interest figure as the full payment. Property taxes, homeowners insurance, PMI, and HOA dues (if applicable) are not included in the base calculation and typically add several hundred dollars per month.

Comparing loans with different terms using monthly payment alone. A lower monthly payment on a longer term can mean tens of thousands more in total interest -- always check total interest paid alongside the monthly figure.

The Inputs, Field by Field

Home price. The full purchase price you have agreed to, before any down payment. If you are still shopping, enter the top of your budget to see the resulting payment, then work backward until the number feels comfortable.

Down payment. The cash you pay up front, as a dollar amount or a percentage of the price. A larger down payment lowers the financed principal, and once you reach 20% it removes the need for private mortgage insurance.

Interest rate. The annual rate your lender quotes for a fixed-rate loan. Because rates move weekly, use a current quote or the latest Freddie Mac PMMS figure rather than a rate you saw months ago.

Loan term. The number of years over which you repay, most commonly 30 or 15. A shorter term raises the monthly payment but sharply reduces total interest, as the 30-versus-15 comparison above shows.

How to Read Your Results

The headline figure is your monthly principal and interest -- the fixed amount you pay the lender each month. Below it, the total interest paid over the life of the loan is often the more revealing number: on a long term it can approach or even exceed the amount you originally borrowed. The amortization schedule breaks every payment into its principal and interest portions and shows your remaining balance month by month, so you can see when you finally cross the halfway point on principal (typically much later than halfway through the term) and when PMI would drop off at 78% of the original home value.

Assumptions and Limitations

This calculator assumes a fixed interest rate for the entire term and computes principal and interest only. It does not add property taxes, homeowners insurance, HOA dues, or PMI unless those fields are provided, so the bill from a mortgage servicer -- which usually escrows taxes and insurance -- will be higher than the base figure here. It also assumes on-time monthly payments with none missed or partial. For an adjustable-rate loan, the result is accurate only for the initial fixed period. Treat every output as an educational estimate for planning, not a loan offer or a guaranteed payment.

Related Calculators and Guides

Once you have a payment estimate, check whether it fits your budget with our how much house can I afford guide, weigh loan lengths with the fixed vs. adjustable-rate comparison, and plan your up-front cash with the down payment savings guide or the first-time homebuyer guide. For a deeper, visual walkthrough of mortgage-specific scenarios, our sister site Visual Mortgage focuses exclusively on mortgages.

Mortgage Calculator