How to use the mortgage calculator
- Pick a preset, such as a 30-year or 15-year mortgage, or type your own numbers.
- Enter the loan amount: the home price minus your down payment.
- Enter the interest rate and the loan term in years.
- Add your monthly property taxes, homeowners insurance and HOA dues to see the full monthly cost.
- Try an extra monthly payment to see how much sooner you could pay off the loan and how much interest you’d save.
The yearly amortization schedule shows how each year’s payments split between interest and principal, and how your balance falls.
How your mortgage payment is calculated
A fixed-rate mortgage has the same principal-and-interest payment every month. It comes from this formula:
M = L × i ÷ (1 − (1 + i)−n)where L is the loan amount, i the monthly interest rate (annual rate ÷ 12) and n the number of monthly payments (years × 12).
Each month, interest is charged on the remaining balance and the rest of the payment reduces the principal. Early on, most of the payment goes to interest. As the balance falls, more of each payment goes to principal.
Example: 30-year vs. 15-year mortgage
Here is a hypothetical $300,000 loan at two common terms, before taxes and insurance:
| Loan | Rate | Monthly payment | Total interest |
|---|---|---|---|
| 30 years | 6.5% | $1,896.20 | $382,633 |
| 15 years | 5.9% | $2,515.39 | $152,770 |
| 30 years + $200 extra a month | 6.5% | $2,096.20 | $279,185 (paid off in about 23 years) |
The 15-year loan costs about $619 more each month but saves roughly $230,000 in interest. Adding just $200 a month to the 30-year loan cuts about seven years off and saves around $103,000.
What’s included in a monthly mortgage payment
- Principal and interest: the part this formula calculates.
- Property taxes: set by your local government and often collected monthly by your lender.
- Homeowners insurance: required by lenders to protect the home.
- Mortgage insurance: on a conventional loan, lenders usually require private mortgage insurance (PMI) when you put down less than 20%. It can generally be removed once you build enough equity.
- HOA dues: if the home is in a homeowners association.
Together, principal, interest, taxes and insurance are often called PITI. Lenders look at the full amount when they decide how much you can borrow.
Ways to lower your mortgage cost
- Improve your credit score before you apply; it affects the rate you’re offered. See our guide to credit scores.
- Make a larger down payment to borrow less and avoid PMI.
- Compare offers by APR, which includes many lender fees, not just the interest rate. Our APR vs. APY guide explains the difference.
- Consider a shorter term if the higher payment fits your budget.
- Pay a little extra toward principal when you can. Check that your loan has no prepayment penalty first.
Frequently asked questions
How much house can I afford?
Lenders compare your total monthly debt, including the new mortgage, with your gross income. Our home affordability calculator estimates a price range from your income, debts and down payment.
Is a 15-year or 30-year mortgage better?
A 15-year loan has a higher monthly payment but usually a lower rate and far less total interest. A 30-year loan keeps payments lower and leaves more room in your budget. The right choice depends on your income, savings and goals.
Do extra payments really save money?
Yes. Extra principal payments reduce the balance that interest is charged on, so you pay less interest and finish sooner. In the example above, $200 a month saves about $103,000 on a $300,000 loan.
Why is my lender’s payment different?
Lenders may include mortgage insurance, escrow for taxes and insurance, fees or a different rounding method. An adjustable-rate mortgage can also change after its fixed period.
Can I use this as a general loan calculator?
Yes. The same formula works for auto, personal and student loans with fixed rates. Use the auto or personal loan preset, or try our car loan calculator for trade-ins and sales tax.
Related calculators and guides
Results are estimates for planning, not a loan offer. Your actual payment depends on your lender, rate, fees, taxes and insurance.