Mortgage Calculator

The monthly principal and interest payment is calculated using the standard amortization formula: M = P[r(1+r)^n] / [(1+r)^n - 1], where P is the loan principal (home price minus down payment), r is the monthly interest rate (annual rate divided by 12), and n is the total number of monthly payments (loan term in years multiplied by 12). This formula ensures each payment covers both interest on the outstanding balance and a portion of the principal, resulting in the loan being fully paid off by the end of the term. Property tax, home insurance, and PMI are added on top of this base amount to give you the total monthly payment. The calculator performs this computation in real time whenever you change any input value.

Private Mortgage Insurance (PMI) is an additional insurance policy that protects the lender in case you default on your mortgage. It is typically required when your down payment is less than 20% of the home purchase price, meaning your loan-to-value ratio exceeds 80%. PMI usually costs between 0.5% and 1% of the entire loan amount per year, and this calculator estimates it at 0.7% annually. Once your loan balance drops below 80% of the original home value, you can request that PMI be removed. Some lenders automatically cancel PMI once the balance reaches 78%. Making a larger down payment upfront can help you avoid PMI entirely, which saves hundreds of dollars per month on more expensive properties.

The interest rate has a significant impact on both your monthly payment and the total amount paid over the life of the loan. Even a small change of 0.5% can mean tens of thousands of dollars in additional interest over a 30-year mortgage. For example, on a $300,000 loan, the difference between 6% and 6.5% interest is about $100 per month and roughly $36,000 in total interest over 30 years. Lower interest rates mean more of each payment goes toward the principal balance, helping you build equity faster. Shopping around for the best rate and considering buying points to lower your rate can provide substantial long-term savings on your mortgage.

A 15-year mortgage has higher monthly payments but a lower total cost because you pay off the loan in half the time and typically receive a lower interest rate. A 30-year mortgage offers lower monthly payments, making it more affordable month-to-month, but costs significantly more in total interest over the full term. For instance, a $280,000 loan at 6.5% would cost about $2,528 per month over 15 years versus $1,770 per month over 30 years. However, the 30-year option would result in paying approximately $357,000 in total interest compared to about $175,000 for the 15-year term. The 20-year option provides a middle ground between the two. Choose based on your monthly budget, financial goals, and how long you plan to stay in the home.

A larger down payment offers several financial advantages. Putting down at least 20% eliminates the need for Private Mortgage Insurance, which can save you hundreds of dollars per month. A larger down payment also means borrowing less, resulting in lower monthly payments and less total interest paid over the life of the loan. It gives you more equity in your home from day one, providing a financial cushion if property values decline. However, depleting your savings entirely for a large down payment is not advisable. You should maintain an emergency fund covering three to six months of expenses. Use this calculator to compare different down payment scenarios and find the balance that works best for your financial situation.

This calculator provides a reliable estimate of your monthly mortgage payment based on standard amortization formulas used throughout the lending industry. The principal and interest calculation is precise for fixed-rate mortgages. However, your actual payment may differ slightly due to factors such as exact property tax assessments, specific insurance quotes, lender-specific PMI rates, HOA fees, and other closing costs not included here. Interest rates vary by lender and depend on your credit score, loan type, and market conditions. For the most accurate figures, request a Loan Estimate from your mortgage lender, which will include all fees and costs specific to your situation. Use this tool for preliminary planning and comparison shopping between different loan scenarios.