Mortgage Calculator

What is the mortgage calculator?

A mortgage calculator estimates what you will pay each month to buy a home with a loan, and shows how that payment is split over time. In the United States the monthly figure most people care about is PITI: Principal, Interest, Taxes and Insurance. Principal is the part that pays down your loan balance; interest is the lender's charge for borrowing; taxes are your property taxes, usually collected monthly into an escrow account; and insurance is your homeowner's policy. If your down payment is below 20% of the home price you will also usually pay PMI (private mortgage insurance), and if you live in a managed community you may pay HOA fees. This tool adds all of those together so you can see the true monthly cost, not just the loan payment. Everything is calculated in your browser — none of your figures are uploaded or stored.

How it works

The loan amount is the home price minus your down payment. The principal-and-interest portion is found with the standard amortized-loan formula, M = P · [r(1 + r)^n] / [(1 + r)^n − 1], where P is the loan amount, r is the monthly interest rate (the annual rate divided by twelve), and n is the total number of monthly payments (years × 12). Early in the loan most of each payment is interest because the balance is large; as the balance falls, more of each payment goes to principal — the shift you can see in the amortization schedule below. On top of principal and interest, the calculator adds one-twelfth of your annual property tax, one-twelfth of your annual insurance, your monthly PMI, and any HOA fee to produce the full PITI payment. A zero-interest loan is handled as a simple division of the balance across the term, avoiding the divide-by-zero the formula would otherwise produce. What affects your payment most? A larger down payment lowers the loan amount and can remove PMI; a shorter term (say 15 years instead of 30) raises the monthly payment but dramatically cuts total interest; and the interest rate — influenced in part by your credit score and market conditions — moves the payment up or down. Making an extra payment toward principal each month shortens the loan and reduces total interest, because every extra dollar stops accruing interest for the rest of the term.

Worked example

Suppose you buy a home for 400,000 with 20% down (80,000), leaving a loan of 320,000 at 6.5% over 30 years. The principal-and-interest payment works out to about 2,023 per month. Add roughly 400 for monthly property tax, 100 for insurance, and no PMI (because you put 20% down), and your PITI is about 2,523. Over the full 30 years you would pay around 408,000 in interest alone. Now add an extra 200 per month toward principal: the loan is paid off several years early and you save tens of thousands of dollars in interest — the exact figure appears in the results as you type. Fixed-rate mortgages keep the same rate and principal-and-interest payment for the whole term, which makes budgeting predictable. Adjustable-rate mortgages (ARMs) start with a lower fixed period and then adjust with the market, so the payment can rise or fall later; this calculator models a fixed rate, which is the most common choice for long-term buyers.