The mortgage calculator on this page will help you estimate how much you can afford to spend on a home based on different interest rates and loan types.
The results generated by this mortgage calculator will also show how much total interest you are likely to pay over the life of the loan. Additionally, it reveals how much you could reduce that amount by making a one-time principal prepayment or by prepaying principal monthly. You can view an estimate of how long it will take to fully repay your home loan, along with an amortization schedule that outlines the remaining principal balance at any point during the loan term.
Definitions
Mortgage amount
The original or expected balance for your mortgage.
Term in years
The number of years over which you plan to repay the loan. Common mortgage terms are typically 15 years and 30 years.
Interest rate
The annual fixed interest rate for this mortgage. Note that this rate differs from the Annual Percentage Rate (APR), which includes additional expenses such as mortgage insurance and origination fees or points paid at the start of the loan. The APR is usually higher than the simple interest rate.
Monthly payment
The monthly principal and interest (PI) payment.
Total payments
The total of all monthly payments made over the full term of the mortgage, assuming no prepayments of principal.
Total interest
The total amount of interest paid throughout the life of the mortgage, based on no prepayments.
Prepayment type
Specifies how often prepayments are made. Options include none, monthly, yearly, or a one-time payment.
Prepayment amount
The amount you intend to prepay toward your mortgage principal, depending on the chosen prepayment type.
Start with payment
Indicates which payment number will include your prepayment. For a one-time prepayment, this is the payment number when it occurs. Prepayments are assumed to be received in time to affect the next month’s interest calculation. A one-time payment at payment number zero assumes prepayment before the first scheduled payment.
Savings
The total interest savings generated by making prepayments on your mortgage.
Report amortization
Select how you prefer the payment schedule to be displayed: annually, summarizing by year, or monthly, showing every payment for the loan term.
This versatile, user-friendly mortgage calculator is designed to help you plan ahead and make well-informed decisions regarding your home financing options for both your current and future living needs.
Table of Contents
How to Calculate Mortgage Payments
Your monthly mortgage payment typically includes four main components: principal, interest, property taxes, and homeowners’ insurance. In some cases, you may also be required to pay for mortgage insurance, particularly if your down payment is less than 20% of the purchase price.
Our mortgage calculator focuses primarily on the two largest elements — principal and interest. Since property taxes and homeowners’ insurance costs can vary significantly depending on location, you would need to determine those separately and add them to the monthly payment figure produced by the calculator.
If you are already familiar with real estate financing, you can start using the mortgage calculator immediately.
If you would like additional guidance, keep reading. We’ll walk you through the key terms involved in mortgage calculation and explain how to accurately input your information into the tool.
How to Use the Mortgage Calculator
Let’s walk through the basic steps first. If you need further explanation, you’ll find additional details below.
Step 1: Enter the Mortgage Amount
Input the loan amount you need, not the total purchase price. For example, if your home costs $400,000 and you make a $50,000 down payment, your mortgage would be $350,000. The mortgage amount reflects only what you are borrowing.
Step 2: Choose a Loan Term
Select the length of your mortgage. The most common term is 30 years, but options include 20, 15, or even 10 years. Shorter terms typically offer lower interest rates but higher monthly payments because the loan is paid off faster.
Step 3: Estimate Your Interest Rate
You may not know your exact interest rate until later in the loan process. For the calculator, make an educated guess based on current market rates. Check financial news, ask a real estate agent, or speak to friends or neighbors who recently purchased or refinanced homes.
Step 4: View Your Monthly Payment
Once you input the amount, term, and interest rate, the calculator will display your estimated monthly payment — covering principal and interest only. To estimate your full monthly cost, remember to add property taxes and insurance separately.
Step 5: Select Your Amortization Report Format
Amortization shows how your payments are split between principal and interest over time. Early payments mostly cover interest; later payments cover more principal. Choose to view your amortization breakdown monthly or annually, then click “View Report” to see the full schedule.
Step 6: Explore Prepayment Options
Use the prepayment feature to see how extra payments affect your loan. You can model one-time, monthly, or annual prepayments.
Prepaying principal reduces total interest costs and shortens the loan term. Even an extra $100 monthly can make a big difference over time.
Experiment with different numbers to see how small changes can produce long-term savings.
Typical Costs Included in a Mortgage Payment
Let’s walk through the five key components that make up your monthly mortgage payment.
Principal
Principal is the amount you still owe after your down payment. For example, if you buy a home for $500,000 and put 20% down, you’ll owe $400,000. Each monthly payment gradually reduces this principal balance.
Interest
Interest is the cost of borrowing money from the bank. It’s charged as a percentage of the loan but accumulates over time. For instance, a 5% interest rate on a $400,000 loan will result in significantly more than $20,000 in interest over the life of the loan.
The higher the interest rate, the higher your monthly payment. Many homeowners refinance their mortgage when rates drop to secure a lower monthly payment.
Property Taxes
Property taxes vary based on your home’s assessed value and local tax rates set by city, county, and state governments. Rates can change over time, making it difficult to predict future costs. Since these taxes are highly variable, our mortgage calculator does not include them. Consult a real estate agent or loan officer to estimate local property taxes.
Homeowners Insurance
Homeowners insurance protects against damages that would be costly to cover out-of-pocket—such as those from natural disasters, accidents, or major repairs. Coverage varies widely based on location and home value. Additional coverage, like earthquake or flood insurance, can increase your premium but may be necessary depending on where you live.
Mortgage Insurance
Mortgage insurance protects the lender—not you—if you default on your loan. It is typically required if your down payment is less than 20% of the home’s purchase price.
To avoid mortgage insurance, aim for a 20% down payment. Some exceptions exist, and a loan officer may help you explore options if your down payment is close to that threshold.
Mortgage Payment Formula
Here’s the basic formula for calculating your full mortgage payment:
Principal + Interest + Property Taxes + Home Insurance + Mortgage Insurance = Total Monthly Payment
Because interest calculations and amortization schedules can be complex, using a mortgage calculator simplifies the process and helps you make smarter financial decisions.
How a Mortgage Calculator Can Help
What are some of the decisions a mortgage calculator can quickly help you make? Here are a few key scenarios:
The Loan Length That’s Right for You
Paying off your home loan sooner can save you significant money on interest. One way to do this is by choosing a shorter loan term, like 15 or 20 years. However, shorter terms mean higher monthly payments.
If you’re confident you can comfortably manage those higher payments, this could be a smart strategy. On the other hand, a 30-year loan offers lower monthly payments but will cost more in interest over time.
Many borrowers opt for 30-year loans because they can always choose to prepay additional principal without committing to the higher required payments of a shorter term. This flexibility is valuable if your financial situation changes, such as in the event of a job loss.
The mortgage calculator will help you compare monthly costs for different loan lengths so you can decide what fits your budget and risk tolerance.
If an ARM Is a Good Option
An ARM (Adjustable Rate Mortgage) typically offers a lower initial interest rate compared to a traditional fixed loan. These are usually structured as 5/1 or 7/1 ARMs—meaning the rate is fixed for the first five or seven years, then adjusts annually based on the market rate.
An ARM can be a smart choice when interest rates are relatively high because you may benefit from lower initial payments and potentially even lower rates later, if market rates drop.
However, if rates are already low, an ARM can become risky—future adjustments could raise your payments.
Suppose market rates are around 7%, but an ARM offers you a 6.5% fixed rate for the first five years. The mortgage calculator will show you the monthly savings during those early years, helping you weigh whether it’s a worthwhile risk.
If You’re Spending More Than You Can Afford
Your mortgage payment should fit comfortably within your income. A common guideline suggests keeping housing costs under 30% to 40% of your net income.
For example, if your household brings in $5,000 monthly, aiming for a mortgage payment under $2,000 is advisable.
Using the mortgage calculator, you can input various loan scenarios to see how different loan amounts, terms, and interest rates affect your monthly payments. Just remember to factor in estimated property taxes and homeowners insurance, as the calculator focuses primarily on principal and interest.
How Much to Put Down
Your down payment plays a big role in all this too. Suppose you can’t afford more than $2000 per month in monthly mortgage payments, but the home you want at current interest rates would cost you $2200.
That’s close enough that you should be able to get it under the $2000 goal with a little creativity. One way might be to increase your down payment. Pushing that up from 10% to 20% can make a huge difference, for two reasons.
First, it lowers the size of the loan, and thus lowers the monthly payment and the interest that you’ll be charged. Second, it eliminates the mortgage insurance requirement. For someone in our scenario, those two changes would very likely get their monthly payment under $2000.
Our mortgage calculator lets you enter whatever loan amount you want. If you know the house you want and know the purchase price, try inputting various loan amounts based on different down payments until you reach a monthly payment you are happy with.
Deciding How Much House You Can Afford
How much house you can truly afford is a more complex question than it first appears. Most people purchase homes worth far more than their annual income because mortgage costs are spread over many years, typically 30. This long repayment period helps make monthly payments more manageable.
A mortgage calculator is an essential tool for estimating your actual monthly payments based on the home’s price, your down payment, the loan term, and the interest rate. By adjusting these variables, you can better assess your buying power and financial comfort.
If you want to lower your monthly payments, there are a few strategies you can consider. Increasing your down payment will reduce the amount you need to borrow. Choosing a longer loan term, such as 30 years instead of 15, can also decrease your monthly obligation, although it will increase the total interest paid over the life of the loan. Securing a lower interest rate by shopping around for the best loan offers will further reduce your costs. Alternatively, opting for a less expensive home can help you stay well within your budget.
Use the mortgage calculator to explore different financial scenarios and find a plan that aligns with your long-term financial stability.
How to Lower Your Monthly Mortgage Payment
There are several strategies you can use to lower your monthly mortgage payment, and you can explore the impact of each one using the mortgage calculator.
First, consider choosing a longer loan term. A longer mortgage—such as a 30-year loan—will lower your monthly payments compared to a shorter-term loan. While it’s true you will pay more in total interest over the life of the loan, many homeowners move long before the 30 years are up, making the higher long-term cost less of a concern. For many, the ability to secure a lower monthly payment outweighs the increased lifetime cost.
Another way to lower your monthly costs is to spend less on the home itself. In some areas, this is easier said than done. However, staying disciplined with your budget and resisting the temptation to look at homes outside your price range will help ensure you don’t take on a larger loan than necessary.
Avoiding private mortgage insurance (PMI) is another effective tactic. PMI is typically required if your down payment is less than 20% of the home’s purchase price. By saving enough to make a larger down payment, you can eliminate this additional monthly expense entirely.
It also pays to shop around for a lower interest rate. Not all lenders are the same—some loan officers will go the extra mile to secure better terms for you, while others may not. If you feel your quoted rate is too high, don’t hesitate to seek other options and negotiate for better rates.
Finally, making a bigger down payment not only helps avoid PMI but also reduces the overall size of the loan. The smaller the loan amount, the lower your monthly payments will be. Simply put, a $300,000 loan will cost less per month than a $400,000 loan, regardless of the interest rate.
Using these strategies, you can create a more manageable monthly payment and improve your long-term financial outlook.
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