Mortgage Calculator

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

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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 much does a 1% higher rate add to a mortgage payment?

About $164 a month on a $250,000, 30-year mortgage. At 6% the principal and interest payment is about $1,499, and at 7% it is about $1,663. Over the full 30 years that one-point gap adds roughly $59,000 in interest, which is why shopping several lenders for a lower rate pays off.

Is a 15-year or 30-year mortgage better?

A 15-year mortgage saves far more interest, while a 30-year mortgage has the lower payment. At the same 6% rate on $250,000, the 15-year payment is about $2,110 a month with about $130,000 in total interest, against about $1,499 a month and $290,000 in interest over 30 years. The right choice depends on whether the higher payment fits the budget.

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% to 1.5% of the loan amount per year and can be cancelled once equity in the home reaches 20%.

What is included in a monthly mortgage payment?

A full mortgage payment usually covers principal, interest, property taxes and homeowners insurance, known together as PITI. PMI is added when the down payment is under 20%, and HOA dues are paid to the association on top. On a fixed-rate loan the principal and interest portion never changes, while the tax and insurance portion moves when those bills change.