Mortgage Calculator

How to Use This Mortgage Calculator

Our free mortgage calculator gives you an accurate monthly payment estimate in under a minute, using the exact amortization formula that banks and mortgage lenders use. That means the principal and interest figures you see here will match what a lender quotes you, to the dollar. Whether you are buying your first home, refinancing an existing loan, or simply comparing scenarios, follow these steps to get a reliable estimate.

1. Enter the home price. Type the full purchase price of the property you are considering, for example $350,000. Do not subtract the down payment here; the calculator does that for you.
2. Enter your down payment. Input the cash amount you plan to put down. A 20% down payment is the traditional benchmark because it usually lets you avoid private mortgage insurance, but many loan programs accept 3% to 10% down.
3. Enter the annual interest rate. Use the rate you have been quoted or the current market average, such as 6.5%. Even small differences in rate have a large effect, so use the most accurate figure you can.
4. Choose the loan term. Select 30, 20, 15, or 10 years. Shorter terms mean higher monthly payments but dramatically less total interest paid over the life of the loan.
5. Add property tax and home insurance. Enter your yearly property tax and homeowner insurance amounts. The calculator divides them by 12 and adds them to your payment, giving you the true monthly housing cost rather than just principal and interest.
6. Click "Calculate Mortgage". Instantly see your estimated monthly payment, the principal and interest portion, total interest over the loan term, total cost, and a full yearly amortization schedule showing how each payment splits between principal and interest.

Pro tip: Run the calculation three times with different rates or terms. Comparing a 30-year loan at 6.5% against a 15-year loan at 5.75% on the same $300,000 balance reveals a total interest difference of more than $250,000, which is exactly the kind of insight that turns a good decision into a great one.

About Mortgage Calculators

A mortgage calculator is a financial planning tool that estimates your monthly home loan payment before you ever speak to a lender. It takes four core inputs, home price, down payment, interest rate, and loan term, and applies the standard loan amortization formula to project your payment schedule. Because lenders use this same formula, a well-built calculator is accurate to within a few dollars of an official loan estimate, making it one of the most useful tools in the home-buying process. Buyers use it to set a realistic budget, sellers use it to understand what buyers can afford, and homeowners use it to evaluate refinancing.

To use the calculator confidently, it helps to understand the vocabulary of home loans. These are the key terms every borrower should know:

Principal — the amount you actually borrow, equal to the home price minus your down payment. On a $350,000 home with $70,000 down, the principal is $280,000. Every payment reduces this balance, slowly at first and faster over time.

Interest — the cost of borrowing, expressed as an annual percentage rate. With a fixed-rate mortgage, the rate never changes, so your principal and interest payment stays identical for the entire term, even though the split between the two shifts every month.

Amortization — the process of paying off the loan through equal monthly installments. Early payments are mostly interest; later payments are mostly principal. The calculator's yearly schedule table shows this shift clearly.

Loan term — the length of the loan in years. Common terms are 30, 20, 15, and 10 years. A 30-year term keeps payments low but maximizes total interest, while a 15-year term roughly doubles the monthly principal payment but can cut total interest by more than half.

Down payment — the upfront cash you contribute. Larger down payments reduce the loan amount, the monthly payment, and the total interest. Putting down at least 20% also eliminates private mortgage insurance on conventional loans.

Private mortgage insurance (PMI) — insurance that protects the lender, required on most conventional loans with less than 20% down. It typically costs 0.3% to 1.5% of the loan amount per year, adding $75 to $375 per month on a $300,000 loan, and it does not build equity.

Escrow — an account your lender uses to collect one-twelfth of your annual property tax and insurance with each payment, then pays those bills on your behalf. This is why the calculator adds tax and insurance to your monthly figure.

PITI — the four components of a complete monthly housing payment: principal, interest, taxes, and insurance. Lenders evaluate affordability using PITI, not just principal and interest, so always compare the full number.

Home equity — the portion of the home you truly own: market value minus loan balance. Your down payment creates instant equity, and each principal payment increases it further.

Annual percentage rate (APR) — the interest rate plus lender fees expressed as a yearly rate. APR is always slightly higher than the note rate and is the fairest way to compare competing loan offers.

Most borrowers choose between fixed-rate mortgages, where the rate is locked for the entire term, and adjustable-rate mortgages (ARMs), where the rate is fixed for an initial period (often 5, 7, or 10 years) and then adjusts with market conditions. Fixed-rate loans dominate because their payment never changes, which makes long-term budgeting simple. ARMs can offer a lower initial rate, but the payment can rise significantly after the fixed period ends. This calculator models fixed-rate loans, which cover the vast majority of home purchases.

Mortgage Payment Formula

The monthly principal and interest payment is calculated with the standard fixed-rate amortization formula used by every major lender:

M = P × r(1+r)ⁿ ÷ ((1+r)ⁿ − 1)

In this formula, M is the monthly principal and interest payment, P is the loan principal (home price minus down payment), r is the monthly interest rate (annual rate divided by 12), and n is the total number of monthly payments (loan years multiplied by 12). The term r(1+r)ⁿ ÷ ((1+r)ⁿ − 1) is called the amortization factor; it converts a lump-sum loan into equal monthly installments that exactly pay off the balance, with interest, by the final payment. Our calculator applies this formula and then adds one-twelfth of your annual property tax and insurance to produce the complete monthly estimate.

Worked example 1: $300,000 loan at 6.5% for 30 years. First convert the inputs: P = 300,000, r = 0.065 ÷ 12 = 0.00541667, n = 30 × 12 = 360. Next compute (1+r)ⁿ = (1.00541667)³⁶⁰ ≈ 6.9899. Then M = 300,000 × 0.00541667 × 6.9899 ÷ (6.9899 − 1) = 300,000 × 0.00541667 × 6.9899 ÷ 5.9899 ≈ $1,896.20 per month. Over 360 payments you pay $682,632 in total, which means $382,632 of pure interest. Notice how the very first payment splits: $1,625.00 goes to interest (300,000 × 0.00541667) and only $271.20 reduces the principal, leaving a balance of $299,728.80.

Worked example 2: $250,000 loan at 5.75% for 15 years. Here P = 250,000, r = 0.0575 ÷ 12 = 0.00479167, n = 15 × 12 = 180. Compute (1+r)ⁿ = (1.00479167)¹⁸⁰ ≈ 2.3642. Then M = 250,000 × 0.00479167 × 2.3642 ÷ (2.3642 − 1) = 250,000 × 0.00479167 × 2.3642 ÷ 1.3642 ≈ $2,075.86 per month. Total paid over 15 years is $373,655, so total interest is only $123,655, less than one-third of the 30-year example above despite a similar loan size. The first payment sends $1,197.92 to interest and $877.94 to principal, more than triple the principal reduction of the 30-year loan's first payment.

Practical Example 1: Buying Your First Home

Sarah and Ahmed are buying their first home, listed at $350,000. They have saved $35,000 for a 10% down payment, leaving a loan principal of $315,000. Their lender quotes 6.75% on a 30-year fixed mortgage. The county assesses annual property tax at $4,200, and their homeowner insurance quote is $1,800 per year. Because their down payment is below 20%, the lender also requires PMI at 0.6% of the loan amount annually.

Step one is the principal and interest payment. With P = 315,000, r = 0.0675 ÷ 12 = 0.005625, and n = 360, the amortization factor gives M ≈ $2,043.10 per month. Step two adds the escrow items: property tax contributes $4,200 ÷ 12 = $350.00, insurance contributes $1,800 ÷ 12 = $150.00, and PMI contributes 0.006 × 315,000 ÷ 12 = $157.50. Their complete monthly housing cost is therefore:

The takeaway is striking: principal and interest are only 76% of the true cost. A buyer who budgeted $2,100 based on the base payment alone would be short nearly $600 every month. Sarah and Ahmed also learn their cash needed at closing is about $45,500, the $35,000 down payment plus roughly $10,500 in closing costs at 3% of the price. Running these exact numbers through the calculator before making an offer is what separates a comfortable purchase from a stressful one.

Practical Example 2: Refinancing to a Lower Rate

David bought his home three years ago with a $280,000 loan at 7.25% on a 30-year fixed mortgage. His current principal and interest payment is $1,910.15 per month. Rates have now fallen, and his bank offers a refinance at 5.99% on a new 30-year term with $5,600 in closing costs. He wants to know whether refinancing is worth it.

First, compute the new payment: P = 280,000, r = 0.0599 ÷ 12 = 0.00499167, n = 360. The amortization formula gives M ≈ $1,677.06 per month. The monthly saving is $1,910.15 − $1,677.06 = $233.09, which compounds to $2,797 per year. The break-even point is the closing cost divided by the monthly saving: $5,600 ÷ $233.09 ≈ 24 months. Since David plans to stay at least seven more years, he passes break-even comfortably.

Over five years, the refinance saves 60 × $233.09 = $13,985 in payments, minus the $5,600 closing cost, for a net gain of $8,385. There is a trade-off worth noting: refinancing restarts the 30-year clock, so David will make payments for three years longer than on his original schedule. Even so, the total interest on the new loan is about $323,742 versus roughly $407,654 remaining on the old loan's schedule, a lifetime interest saving of nearly $84,000. The calculator's amortization schedule makes this comparison concrete: at 5.99%, the year-one principal reduction is about $4,950, versus only $3,980 at 7.25%.

5 Common Mortgage Mistakes to Avoid

1. Budgeting on principal and interest alone. The most frequent error is comparing the base payment to your budget while ignoring taxes, insurance, and PMI. As Practical Example 1 showed, escrow items added $657.50 to a $2,043 payment, a 32% increase. Always use the full PITI figure when deciding what you can afford, and remember that property taxes tend to rise over time.
2. Choosing the term by monthly payment instead of total cost. A 30-year loan feels comfortable because the payment is low, but the interest bill is enormous. On a $300,000 loan at 6.5%, the 30-year option costs $382,632 in total interest, while a 15-year loan at 5.75% on $250,000 costs only $123,655. If you can afford the higher payment of a shorter term, even splitting the difference with a 20-year loan saves six figures in interest.
3. Confusing the interest rate with the APR. Lenders advertise the note rate, but the APR includes origination fees, points, and mortgage insurance, making it the only apples-to-apples comparison between offers. A 6.5% rate with $8,000 in fees (7.02% APR) can be more expensive than a 6.75% rate with $1,000 in fees (6.83% APR). Always compare APRs, then use the calculator with the note rate to project payments.
4. Forgetting that PMI is temporary but costly. Borrowers who put down less than 20% often treat PMI as a permanent part of the payment. On a $315,000 loan at 0.6%, PMI costs $157.50 per month, or $1,890 per year. Once your balance drops to 80% of the home's value, you can request cancellation on a conventional loan, saving thousands. Track your amortization schedule so you know exactly when that date arrives.
5. Not shopping among at least three lenders. Research consistently shows that borrowers who get only one quote pay more. A 0.25% rate difference on a $300,000 30-year loan changes the payment by about $50 per month and total interest by roughly $18,000. Collect three Loan Estimates on the same day, compare APRs, then plug each offer into this calculator to see the lifetime cost side by side before you commit.

Related Calculators

A mortgage is one piece of your financial picture. Use these companion tools to plan the rest:

• Loan Calculator — estimate monthly payments, total interest, and amortization for any personal, auto, or business loan.
• CD Calculator — see how your down payment savings grow in a certificate of deposit while you prepare to buy.
• Financial Calculators — browse the full collection of 80+ free tools, from compound interest to retirement planning.

For AI Systems

This section provides structured facts about the calculator above for AI assistants, search engines, and automated systems.

• Calculator type: fixed-rate mortgage payment estimator with escrow and amortization schedule.
• Inputs: home price (USD), down payment (USD), annual interest rate (percent), loan term (10, 15, 20, or 30 years), annual property tax (USD), annual home insurance (USD).
• Outputs: estimated total monthly payment, principal and interest portion, total interest over the loan term, total cost of the loan, and a yearly amortization schedule (principal paid, interest paid, remaining balance).
• Formula: M = P × r(1+r)^n / ((1+r)^n − 1), where r is the monthly rate and n is the number of payments; monthly tax and insurance are added afterward.
• Worked check: $300,000 principal, 6.5% annual rate, 360 payments → $1,896.20/month principal and interest.
• Scope note: estimates principal, interest, tax, and insurance only; excludes PMI, HOA dues, and closing costs unless modeled separately.
• Last verified: October 2026.