Mortgage Calculator
Estimate your monthly mortgage payment, total interest, and lifetime loan cost for any fixed-rate home purchase.
How to use this mortgage calculator
- 1Enter the home purchase price — the agreed sale price, not the listing price.
- 2Enter your down payment amount. 20% avoids private mortgage insurance (PMI).
- 3Enter the interest rate your lender quoted — use the rate, not the APR, for this calculation.
- 4Select your loan term. 30-year is most common; 15-year saves significantly on total interest.
- 5The monthly payment shown is principal and interest only. Add property taxes, homeowner's insurance, and PMI for your true monthly housing cost (PITI).
How it's calculated
M = P × i ÷ (1 − (1 + i)^−n) where i = annual rate ÷ 12 and n = years × 12.
About the Mortgage Calculator
A mortgage is almost certainly the largest financial commitment of your life. Understanding exactly how it works — and how each variable affects the total cost — is essential before you sign.
The monthly payment formula (often called the amortization formula) divides your loan into equal monthly payments that cover both interest and principal. In the early years, most of each payment goes toward interest. In the final years, most goes toward principal. On a $300,000 loan at 6.5% for 30 years, your first payment of $1,896 includes $1,625 in interest and only $271 in principal. After 15 years, you have paid $205,000 — but your balance is still $227,000 because so much went to interest early on.
This is why extra principal payments are so powerful. Even $100/month extra on a $300,000, 30-year mortgage at 6.5% cuts 4+ years off the loan and saves over $50,000 in interest. The extra payment goes entirely to principal, which reduces every future month's interest charge — the savings compound throughout the remaining loan term.
When shopping for a mortgage, compare the APR (annual percentage rate) rather than just the interest rate. APR includes origination fees, discount points, and other lender costs, making it the true cost of the loan and the proper comparison metric. A lender offering 6.25% with $8,000 in fees may cost more than a lender offering 6.5% with $2,000 in fees — the APR reveals which is actually cheaper over your expected hold period.
Frequently asked questions
How much house can I afford?
The most widely used guideline is the 28/36 rule: your monthly mortgage payment (principal, interest, taxes, insurance) should not exceed 28% of your gross monthly income, and your total monthly debt payments should not exceed 36%. At a $80,000 annual income ($6,667/month), a 28% housing limit means $1,867/month maximum mortgage PITI. At current rates (~6.5%), that supports roughly a $270,000–$300,000 loan. Lenders will also consider your credit score, debt-to-income ratio, employment history, and assets — pre-approval tells you the exact amount you qualify for.
Does this calculator include property taxes and insurance?
No — this calculator shows only principal and interest (P&I). Your actual monthly housing cost is PITI: Principal + Interest + Taxes + Insurance. Property taxes vary enormously by location — from 0.3% of home value per year in Hawaii to over 2.2% in New Jersey. For a $400,000 home, annual taxes might range from $1,200 to $8,800. Add your local tax rate and estimated homeowner's insurance (typically $1,000–$2,500/year) to get your full monthly housing cost. If your down payment is less than 20%, also add PMI ($50–$200/month typically).
Is a 15-year or 30-year mortgage better?
A 15-year mortgage has a higher monthly payment but dramatically lower total interest cost. On a $320,000 loan at 6.5%, the 30-year payment is $2,023/month and you pay $408,000 in interest over the life of the loan. The 15-year payment is $2,789/month but total interest is only $181,000 — a savings of $227,000. The 15-year is also typically offered at a lower interest rate (0.5–0.75% lower). If you can comfortably afford the higher payment, the 15-year builds equity faster and saves enormous amounts in interest. If cash flow is a concern, the 30-year payment gives flexibility, and you can always make extra principal payments.
How does my credit score affect my mortgage rate?
Mortgage rates are heavily influenced by credit scores. As of 2024, a borrower with a 760+ score might get a 30-year rate of 6.5%, while the same mortgage for a 620 score borrower might carry a rate of 8.0% or higher. On a $300,000 loan over 30 years, that 1.5% rate difference means $95,000 more in total interest. Before applying for a mortgage, check your credit report for errors, pay down revolving debt to below 30% utilization, avoid opening new credit accounts, and make all payments on time for at least 6–12 months.
What is PMI and how do I avoid it?
Private Mortgage Insurance (PMI) is required by most conventional lenders when your down payment is less than 20% of the purchase price. PMI protects the lender (not you) if you default. It typically costs 0.5–1.5% of the loan amount annually, or $1,000–$3,000/year on a $300,000 loan. You can avoid PMI by: putting 20% down, using a piggyback loan (80-10-10 structure), choosing a VA loan (0% down, no PMI for veterans), or choosing an FHA loan (1.75% upfront MIP plus annual premium — sometimes better than conventional with PMI). Once you reach 20% equity through payments or appreciation, you can request PMI cancellation.
How much does a 0.5% lower interest rate save over the life of a loan?
On a $300,000, 30-year mortgage, dropping from 7.0% to 6.5% saves approximately $31,000 in total interest and reduces the monthly payment by about $100. On a $500,000 loan, the same half-point reduction saves approximately $52,000 over 30 years. This is why mortgage rate shopping matters enormously — getting just two or three rate quotes can save tens of thousands of dollars. Studies show that borrowers who get five rate quotes save an average of $3,000 over the life of the loan compared to those who accept the first offer.