How this mortgage calculator works
A mortgage payment is mostly made up of two parts: principal, which pays down the amount you borrowed, and interest, which is what the lender charges for the loan. Most U.S. home loans are fixed-rate and fully amortizing, meaning the principal-and-interest portion stays the same every month, but the split shifts over time. Early payments are mostly interest; later payments are mostly principal.
This calculator uses the standard amortization formula: M = P × r / (1 − (1 + r)−n), where P is the loan amount (home price minus down payment), r is the monthly interest rate (annual rate ÷ 12) and n is the number of monthly payments. It then adds one-twelfth of your yearly property tax and homeowners insurance, because most lenders collect those through an escrow account along with your payment.
What affects your monthly payment
- Interest rate: even a half-point difference can change the payment by over a hundred dollars a month on a typical loan and tens of thousands in total interest.
- Loan term: a 15-year loan has a higher payment than a 30-year loan but dramatically less total interest.
- Down payment: a larger down payment shrinks the loan, and putting down 20% or more usually avoids private mortgage insurance (PMI).
- Taxes and insurance: these vary widely by location and can add 20–40% on top of principal and interest.
Tips for using the results
Many lenders follow the 28/36 guideline: keep your total housing payment under about 28% of gross monthly income and all debt payments under 36%. Use the calculator to try different prices and down payments until the monthly figure fits your budget. Remember that HOA dues, PMI, maintenance and utilities are not included here, so leave room for them.
Results are estimates for planning purposes. Your actual rate and costs depend on your credit, the property, and the lender's quote.
Frequently asked questions
What is included in a mortgage payment?
Typically principal, interest, property taxes and homeowners insurance (often called PITI). Some loans also include PMI or HOA dues, which this calculator does not add.
Is a 15-year or 30-year mortgage better?
A 15-year loan saves a lot of interest and builds equity faster, but the monthly payment is higher. A 30-year loan is more affordable month to month and offers flexibility.
How much down payment do I need?
Conventional loans can start at 3–5% down, FHA at 3.5%. Putting 20% down generally avoids PMI and lowers the payment.
Does paying extra principal help?
Yes. Extra principal payments reduce the balance faster, cutting total interest and shortening the loan.