Mortgage Calculator: Estimate Your Monthly Payment in Seconds
How This Mortgage Calculator Works
This mortgage calculator estimates your monthly payment using a standard amortization formula used by lenders. When you enter the home price, down payment, interest rate, and loan term, the calculator determines your loan amount (principal) and calculates the fixed monthly payment required to fully repay the loan over the selected term. It also estimates total interest paid and generates an amortization schedule showing how each payment is divided between principal and interest over time. This allows you to understand not only your monthly obligation, but also the long-term cost of borrowing and how quickly your loan balance decreases.
Mortgage Calculator Amortization Formula
Mortgage payments are calculated using a fixed-rate amortization formula. The formula factors in the loan amount (principal), the monthly interest rate (annual rate divided by 12), and the total number of monthly payments over the loan term. Early in the loan, a larger portion of each payment goes toward interest, while a smaller portion reduces the principal balance. Over time, this shifts — more of each payment goes toward principal and less toward interest. This gradual shift is what creates the amortization schedule, helping borrowers see exactly how their loan balance declines month by month.
Example Mortgage Calculation
To better understand how a mortgage payment is calculated, consider this example. Suppose you purchase a home for $400,000 and make a 20% down payment ($80,000). Your loan amount would be $320,000. If you choose a 30-year fixed mortgage at a 6.5% interest rate, your estimated monthly principal and interest payment would be approximately $2,022. Over the life of the loan, you would pay significantly more in total interest than the original loan amount. This example shows why interest rate and loan term dramatically impact long-term borrowing costs.
What Is Included in a Mortgage Payment?
A typical mortgage payment includes more than just principal and interest. Many lenders require borrowers to escrow property taxes and homeowners insurance as part of the monthly payment. This is commonly referred to as PITI — Principal, Interest, Taxes, and Insurance. Depending on the property, you may also pay homeowners association (HOA) fees. Understanding these additional costs is essential when budgeting for homeownership.
Mortgage Calculator: Factors That Affect Your Payment
Interest Rate Changes
Even a small change in your interest rate can significantly impact your monthly mortgage payment and the total interest you pay over time. For example, a 1% increase on a $300,000 loan can add hundreds of dollars per month and tens of thousands of dollars in total interest over a 30-year term. Securing a lower interest rate through a strong credit score or favorable market timing can substantially reduce long-term borrowing costs.
Down Payment Size
Your down payment directly reduces the amount you need to borrow, which lowers your monthly payment and total interest paid. A larger down payment may also help you avoid private mortgage insurance (PMI), which can increase your monthly costs. While smaller down payments make homeownership more accessible, they typically result in higher long-term borrowing expenses.
Loan Term (15 vs 30 Years)
A 15-year mortgage usually comes with a lower interest rate and allows you to pay off your loan faster, saving significant money in total interest. However, monthly payments are higher because the balance is repaid over a shorter period. A 30-year mortgage reduces monthly payments by spreading them over more years, but it increases the total interest paid over the life of the loan.
Property Taxes
Property taxes can be a major component of your monthly housing cost, especially in higher-tax areas. If taxes are escrowed, the lender collects them monthly and adjusts the escrow amount if tax bills change.
Insurance Premiums
Homeowners insurance (and, in some cases, flood or other supplemental coverage) affects your monthly payment when escrowed. Premiums can change over time based on claims history, property updates, and insurer pricing.
Credit Score
Your credit score influences the interest rate lenders offer. A higher score typically qualifies you for better rates, reducing both your monthly payment and total interest paid.
Use our free mortgage calculator to estimate your monthly mortgage payment, total interest, and loan payoff timeline. Adjust the home price, interest rate, loan term, and down payment to see how each factor impacts your mortgage cost. This tool helps you plan, compare scenarios, and make informed home-buying decisions.
This calculator uses standard fixed-rate amortization formulas commonly used by lenders in the United States. Results are estimates for educational purposes and should not replace professional financial advice.
Important to know
Disclaimer: These mortgage calculators provide estimates for informational and educational purposes only. Results are based on standard mortgage formulas and may not reflect actual loan terms, fees, taxes, insurance, or lender-specific conditions. This tool does not provide financial, lending, or legal advice.
These calculators use standard mortgage amortization formulas commonly used to estimate loan payments based on the information you provide. It is intended to help users understand potential payment scenarios and compare options, not to replace lender disclosures or professional advice.
These calculators run on a secure cloud-hosted financial engine built with a production-grade .NET engine and hosted on Microsoft Azure for speed and accuracy.
Frequently Asked Questions
How Interest Rates Impact Your Mortgage Calculator Results? Rates vary based on market conditions and credit score, but even a small difference in rate can significantly change total interest paid.
Is a 15-year mortgage better than a 30-year mortgage? A 15-year loan usually has lower interest rates and saves money long-term but requires higher monthly payments.
How much income do I need for a mortgage? Lenders typically evaluate your debt-to-income (DTI) ratio, often targeting 36–43%.
Does this Mortgage Calculator include taxes and insurance?
Explain whether yours does or does not.
Can I pay off my Mortgage Calculator early?
Yes, and link to your Mortgage Payoff page.
Want to compare scenarios? Try our Mortgage Payoff Calculator to see how extra payments shorten your loan, or use our Rent vs Buy Calculator to decide whether buying a home makes financial sense.