Mortgage Payment Calculator
How This Calculator Works
Monthly Payment (M) = P [ r(1+r)^n ] / [ (1+r)^n - 1 ]
Where:
P = Loan principal (home price - down payment)
r = Monthly interest rate (annual rate / 12)
n = Total number of payments (loan term in years x 12)
Total Interest = (M x n) - P
Total Cost = M x nA mortgage payment calculator helps you estimate your monthly payment when taking out a home loan. It uses the standard amortization formula used by virtually every lender in the United States to compute fixed-rate mortgage payments.
Understanding the Calculation
Your monthly mortgage payment is determined by three key factors: the loan amount (home price minus your down payment), the interest rate, and the loan term. The calculator uses the standard annuity formula to compute a fixed monthly payment that, over the life of the loan, will pay off both the principal and all accrued interest.
Each monthly payment is split between principal repayment and interest charges. In the early years of a mortgage, the majority of your payment goes toward interest. As you pay down the principal, a larger share of each payment goes toward reducing the remaining balance. This is called amortization.
How to Use This Calculator
Enter your home price, down payment amount (either as a dollar amount or a percentage of the home price), the annual interest rate offered by your lender, and select your desired loan term. The calculator instantly computes your monthly payment, total interest over the life of the loan, and the total cost of the home including interest.
The pie chart breaks down how much of your total payments go toward principal versus interest, giving you a clear picture of the true cost of borrowing. Use this information to compare different loan scenarios, such as putting more money down to reduce total interest, or choosing a 15-year term instead of 30 years to save significantly on interest charges.
What Is Not Included
This calculator computes principal and interest (P&I) only. Your actual monthly housing payment may also include property taxes, homeowner's insurance (often bundled into an escrow payment), private mortgage insurance (PMI) if your down payment is less than 20%, and HOA fees if applicable. These additional costs can add several hundred dollars per month to your total housing expense, so be sure to account for them in your budget planning.
Tips for Getting the Best Rate
A lower interest rate can save you tens of thousands of dollars over the life of your loan. To secure the best rate: maintain a credit score above 740, save at least 20% for a down payment to avoid PMI, shop multiple lenders and compare Loan Estimates, and consider paying discount points upfront to buy down your rate. Even a 0.25% difference in rate on a $400,000 loan can mean over $20,000 in savings over 30 years.
Frequently Asked Questions
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What You Should Know
Understanding Your Mortgage: A Complete Guide
Buying a home is the largest financial decision most people ever make. Understanding how your mortgage payment is calculated empowers you to shop smarter, negotiate better terms, and potentially save hundreds of thousands of dollars over the life of your loan.
The True Cost of Homeownership
When most people think about buying a home, they focus on the purchase price. But the true cost of homeownership extends far beyond the sticker price. On a typical 30-year mortgage, you may pay nearly as much in interest as the original loan amount. For example, a $350,000 loan at 7% interest will cost approximately $488,000 in interest alone over 30 years, bringing the total cost to over $838,000.
Beyond principal and interest, homeowners pay property taxes (typically 1-2% of home value annually), homeowner's insurance ($1,000-$3,000/year), maintenance and repairs (budget 1% of home value annually), and potentially HOA fees ($200-$500/month in many communities).
Strategies to Pay Off Your Mortgage Faster
One of the most effective strategies is making one extra payment per year. By paying biweekly instead of monthly (26 half-payments instead of 12 full payments), you effectively make 13 monthly payments per year. On a $300,000 loan at 7%, this can shave nearly 5 years off your mortgage and save over $80,000 in interest.
Another strategy is rounding up your payments. If your monthly payment is $1,996, rounding up to $2,100 each month directs an extra $104 toward principal. Over time, these small additions compound and can save you years of payments.