Mortgage Calculator

Calculate your monthly mortgage payment, total interest, and view an amortization schedule. Plan your home purchase with accurate loan estimates.

How to Calculate Mortgage Payments

A mortgage payment consists of principal (the loan amount) and interest (the cost of borrowing). This calculator uses the standard amortization formula to determine your fixed monthly payment.

Mortgage Payment Formula

M = P × [r(1+r)^n] / [(1+r)^n - 1]

M = Monthly payment
P = Principal loan amount
r = Monthly interest rate (annual rate ÷ 12)
n = Total number of payments (years × 12)

Example Calculation

For a $300,000 loan at 6.5% APR over 30 years:

Monthly rate: 6.5% ÷ 12 = 0.542%
Number of payments: 30 × 12 = 360
Monthly payment: $1,896.20
Total interest paid: $382,633

Understanding Amortization

With each payment, a portion goes to interest and the rest to principal. Early payments are mostly interest; later payments are mostly principal. The amortization schedule shows this breakdown for every payment.

Tips for Lower Mortgage Costs

Larger down payment: Reduces principal and may eliminate PMI
Shorter loan term: Higher payments but much less total interest
Better credit score: Qualifies you for lower interest rates
Extra payments: Even small extra payments reduce total interest significantly

15-Year vs 30-Year Mortgage

On a $300,000 loan at 6.5%:

30-year: $1,896/month, $382,633 total interest
15-year: $2,613/month, $170,389 total interest

The 15-year costs $717 more per month but saves $212,244 in interest. 15-year rates are typically 0.5-0.75% lower than 30-year rates, increasing the savings further.

Impact of Extra Payments

Adding even small amounts to your monthly payment dramatically reduces total interest:

$100/month extra on a $200K loan at 4%: saves $26,500 in interest, pays off 4.5 years early
$200/month extra: saves $44,000, pays off 8 years early
One extra payment per year: cuts a 30-year mortgage to about 25 years

How Much House Can You Afford?

The 28/36 rule is a standard guideline:

28% rule: Spend no more than 28% of gross monthly income on housing costs
36% rule: Total debt payments (housing + car + student loans + credit cards) should not exceed 36%

Example: $6,000/month gross income → max housing payment of $1,680, max total debt of $2,160.

Private Mortgage Insurance (PMI)

PMI is required when your down payment is less than 20%. It costs 0.5-1.5% of the loan annually ($83-$250/month on a $200K loan). PMI is automatically removed when your balance reaches 78% of the home's original value, or you can request removal at 80%.

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Frequently Asked Questions

How is mortgage payment calculated?

Monthly payment = P × [r(1+r)^n] / [(1+r)^n - 1], where P is principal, r is monthly interest rate, and n is total number of payments.

What is included in a mortgage payment?

Principal and interest (P&I). Property taxes, insurance (PITI), and HOA fees are additional costs not included in this calculator.

What is amortization?

Amortization is the process of paying off a loan through scheduled payments. Early payments go mostly toward interest, later payments toward principal.

Should I get a 15 or 30-year mortgage?

15-year mortgages have higher monthly payments but lower total interest. 30-year mortgages have lower monthly payments but higher total interest over the life of the loan.

What affects my mortgage rate?

Credit score, down payment, loan type (fixed/adjustable), loan term, and current market conditions all affect your mortgage rate.

What is PMI and when is it required?

Private Mortgage Insurance (PMI) is required on conventional loans when the down payment is less than 20% of the home price. It protects the lender, not the borrower. PMI typically costs 0.5-1.5% of the loan amount per year and can be cancelled once equity reaches 20%.

How does a 1% rate increase affect the payment on a $250,000 mortgage?

On a $250,000 30-year mortgage, the difference between 6% and 7% is roughly $167 per month. Over 30 years, that 1% rate gap adds more than $60,000 in total interest paid.

Does a lower home price always mean lower total interest cost?

Yes, because the loan principal is smaller and interest accrues on the outstanding balance. A $200,000 loan at 6.5% over 30 years costs about $255,000 in interest, while a $300,000 loan at the same rate costs about $382,000 — the $100,000 price difference creates $127,000 in extra interest.