Mortgage Calculator
Estimate your monthly mortgage payment and the full cost of your home loan. Enter the home price, down payment, interest rate, and loan term to see your payment breakdown.
How Mortgage Payments Are Calculated
Mortgage payments are calculated using the amortization formula, which spreads equal monthly payments across the entire loan term. Each payment is split between interest (charged on the remaining balance) and principal (which reduces what you owe).
In the early years of a mortgage, the majority of each payment goes toward interest. Over time, as the balance decreases, more of each payment goes toward principal. This is why paying extra principal early in the loan has such a dramatic effect on total interest paid.
The Mortgage Payment Formula
M = P × [r(1+r)ⁿ] ÷ [(1+r)ⁿ − 1]
- M = monthly payment
- P = loan principal (home price minus down payment)
- r = monthly interest rate (annual rate ÷ 12)
- n = total number of payments (years × 12)
30-Year vs. 15-Year Mortgage Comparison
| Factor | 30-Year | 15-Year |
|---|---|---|
| Monthly payment | Lower | Higher |
| Total interest paid | Much more | Much less |
| Interest rate | Higher | Lower |
| Cash flow flexibility | Better | Less |
Frequently Asked Questions
- What does a monthly mortgage payment include?
- A basic mortgage payment covers principal (the amount borrowed) and interest. However, many lenders require an escrow account that also collects property taxes and homeowner's insurance, bundled into your monthly payment. This calculator computes the principal and interest portion only.
- Is a 15-year or 30-year mortgage better?
- A 15-year mortgage typically has a lower interest rate and you pay far less total interest, but monthly payments are significantly higher. A 30-year mortgage offers lower monthly payments and more cash flow flexibility, but costs much more in total interest. For example, a $400,000 loan at 6.5% costs about $909,000 over 30 years but only about $608,000 over 15 years.
- How much house can I afford?
- A common guideline is that your housing costs — including principal, interest, taxes, and insurance — should not exceed 28% of your gross monthly income. Some lenders use the 28/36 rule: housing costs below 28% of gross income, and total debt payments below 36%. Use this calculator to find a payment that fits your budget.
- What is the effect of a larger down payment?
- A larger down payment reduces your loan principal, which lowers your monthly payment and the total interest paid over the life of the loan. Additionally, putting down 20% or more typically eliminates the need for Private Mortgage Insurance (PMI), which can add 0.5%–1.5% of the loan amount per year to your costs.
- How does extra principal payment affect my mortgage?
- Making even small additional principal payments each month can significantly reduce the total interest paid and shorten the loan term. For example, adding $200/month to a $400,000 30-year mortgage at 6.5% could save over $80,000 in interest and pay off the loan roughly 5 years early.