Mortgage Calculator
This free calculator estimates the monthly principal-and-interest payment on a fixed-rate mortgage. Enter the home price, your down payment amount, the annual interest rate, and the loan term in years — the calculator returns your estimated monthly payment and the total interest paid over the life of the loan. Property taxes, homeowners insurance, PMI, and HOA fees are not included in this estimate.
How It Works
A mortgage is a fixed-rate amortizing loan, so it uses the standard amortization formula. The variables are:
- P = loan amount = home price minus down payment
- r = monthly interest rate = annual rate ÷ 12 (as a decimal)
- n = total payments = loan term in years × 12
Each monthly payment covers the interest that accrued on the remaining balance that month, plus a portion of the principal. Over 30 years a borrower can pay significantly more in total interest than the original loan amount, especially at higher rates. Choosing a shorter term (e.g., 15 vs. 30 years) dramatically reduces total interest at the cost of a higher monthly payment.
Worked Examples
Example 1 — 30-year conventional. Home price: $400,000. Down payment: $80,000. Loan: $320,000. Rate: 6.5% per year. Term: 30 years. Monthly rate r ≈ 0.005417. n = 360. Monthly payment ≈ $2,022.62. Total interest over 30 years ≈ $408,142.
Example 2 — 15-year. Loan: $250,000. Rate: 5.75%. Term: 15 years. r ≈ 0.004792. n = 180. Monthly payment ≈ $2,080.20. Total interest over 15 years ≈ $124,436 — significantly less than a 30-year loan at the same balance.
Example 3 — starter home. Home price: $280,000. Down payment: $28,000 (10%). Loan: $252,000. Rate: 7.0%. Term: 30 years. Monthly payment ≈ $1,676.32.
When to Use This Calculator
This calculator is most helpful when:
- Estimating affordability: Before house hunting, calculate what monthly payment a given price and rate produces — and work backwards from your budget to a target home price.
- Comparing loan terms: See how a 15-year versus a 30-year mortgage affects monthly payments and total interest.
- Modeling rate changes: Rates move frequently. Re-run the calculator at different rates to understand how much rates affect your payment.
- Planning your down payment: Enter different down payment amounts to see how they change the loan amount and monthly cost.
What this calculator does not include: property tax, homeowners insurance, PMI (required on most loans with less than 20% down), and HOA fees. Your lender will provide a full cost breakdown including all of these items.
Frequently Asked Questions
What is the difference between principal and interest?
Principal is the portion of the payment that reduces your loan balance. Interest is the cost of borrowing. Early payments are heavily weighted toward interest; the share going to principal grows each month.
Does the calculator include PMI?
No. PMI (private mortgage insurance) is typically required when your down payment is less than 20% of the home price. Your lender will quote the PMI cost separately; it typically ranges from 0.5% to 1.5% of the loan amount annually.
How does the loan term affect total cost?
A 15-year loan has higher monthly payments but far less total interest than a 30-year loan at the same rate. The difference in total interest is often hundreds of thousands of dollars on a large loan.
What interest rate should I use?
Use the rate your lender has quoted, or a current market rate if you are in the early planning stage. Rates change daily; for an accurate quote, contact a licensed mortgage lender.