Mortgage Calculator

A fixed-rate mortgage uses the standard amortization formula: payment = L × i ÷ (1 − (1 + i)^-n) where L is the loan amount — the price minus your down payment — i is the monthly rate derived from the annual rate you entered, and n is the number of months in the term. The formula solves for the one constant amount that, paid n times, exactly extinguishes the balance while interest keeps accruing on whatever remains. That is why the payment never changes on a fixed-rate loan, and why the three inputs have such different effects: the loan amount scales the payment linearly, while the rate and the term act on it through an exponent. The rate field defaults to 6.5% because the calculator needs a starting value, not because that reflects any current market. Mortgage rates move continuously and vary by borrower, program and location. Use a quote you have actually been given, or the range a lender tells you you would qualify for.

Interest is charged on what you still owe, and what you owe is at its maximum on day one. So the first payment on a 30-year loan is overwhelmingly interest, with a thin sliver reaching principal. That sliver reduces the balance, which reduces next month's interest, which lets a slightly larger sliver through. The process is self-reinforcing but slow to start, which is why the amortization table looks discouraging for years and then improves sharply. The month where principal finally exceeds interest arrives well past the midpoint of a long, higher-rate loan. The same asymmetry is what makes extra principal payments so effective early. A dollar of principal removed in year two cancels the interest that dollar would have carried for twenty-eight more years. The same dollar in year twenty-five cancels a few months of interest. Nothing else about the loan changes; only the remaining exposure does. Two practical notes. Tell the servicer in writing that extra funds are to be applied to principal, since some will otherwise treat them as a prepaid future installment, which does not reduce the balance. And check whether the loan carries a prepayment penalty — whether one applies depends on the loan type and the contract.

This calculator returns principal and interest. A real mortgage payment is usually assembled from more parts, commonly abbreviated PITI. Property taxes are assessed by your local jurisdiction and vary enormously by state, county and municipality — enough that two identical houses in different places can differ by hundreds of dollars a month on tax alone. Homeowners insurance is required by lenders and priced by property, location and coverage. Both are typically collected by the servicer into an escrow account alongside the loan payment and paid on your behalf, which is why the withdrawal from your account exceeds the number above. On top of that, HOA or condo dues where applicable, and mortgage insurance where the down payment is below the threshold that avoids it. Escrow amounts also change. When tax assessments or insurance premiums rise, the servicer recalculates the escrow portion, and a "fixed-rate" mortgage payment moves accordingly — the principal and interest stay fixed, the total does not. For the binding figures on a specific purchase, the Loan Estimate and Closing Disclosure your lender provides are the documents that count.

If your down payment is below 20% on a conventional loan, the lender will generally require private mortgage insurance. PMI protects the lender against default; it does nothing for you except make the loan possible. The important thing to know is that it is not permanent, and the rules are not purely at the lender's discretion. Under the federal Homeowners Protection Act, for covered borrower-paid PMI on a primary residence, you may request cancellation once the balance reaches 80% of the original value, and the servicer must terminate it automatically when the balance reaches 78% of original value based on the original amortization schedule — provided you are current on payments. Conditions attach to the request route, such as a good payment history and no subordinate liens, and the servicer may require evidence that the value has not declined. So the widely repeated "you need 20% down" is more precisely a PMI threshold, not a requirement to buy a home. Many people buy with less and pay PMI until it ends. What that costs, and how quickly you reach the threshold, is worth calculating rather than assuming. Two limits on the above. The HPA framework applies to conventional loans meeting its criteria; FHA mortgage insurance operates under different rules, and depending on the loan it may last much longer or for the life of the loan. And lender-paid arrangements, where the cost is built into a higher rate instead, do not cancel in the same way. Ask the lender directly which structure your loan uses and when it ends.

Change the term field from 30 years to 15 and two things happen at once: the payment rises substantially, and the total interest falls dramatically. You are borrowing the same money for half as long, and interest is a function of balance times time. The rate is not a single market number applied to everyone. It is priced off your credit profile, the down payment, the loan type and the property, and it varies between lenders on the same day for the same borrower. Discount points are a related lever: paying a fee at closing to buy the rate down, which is worth it only if you hold the loan long enough to recover the cost. Adjustable-rate mortgages deserve a specific caution. An ARM offers a fixed rate for an initial period and then adjusts on a schedule tied to an index, within caps set by the contract. The payment shown here would apply only to the initial period; after that, the whole remaining schedule is recomputed. Whether that is acceptable depends on the caps, the index, how long you expect to hold the loan, and your capacity to absorb a higher payment. Closing costs sit outside this calculation entirely, which is one reason a loan's disclosed APR typically exceeds its note rate. Compare written Loan Estimates from more than one lender — rates and fees vary, and the estimate is standardized precisely so that they can be compared side by side.