Mortgage Calculator

What a mortgage payment is made of

The number a lender quotes as "the payment" is rarely the number that leaves your account. A mortgage payment has a fixed core, principal and interest, wrapped in costs that come with owning the house: property taxes, homeowners insurance, private mortgage insurance when you put less than 20% down, and association dues where they apply. Lenders call the first four PITI and judge your application on the total, so this calculator does too.

Principal and interest stay the same for the life of a fixed-rate loan, but the split between them changes every month. Early payments are mostly interest, because interest is charged on the whole balance; later payments are mostly principal. Taxes and insurance are collected into escrow and rise over time with assessments and premiums. PMI is temporary on a conventional loan, and the calculator stops charging it in the month the balance reaches 78% of the price.

If you are still deciding what price to shop at, start with the home affordability calculator, which works backward from your income. If you are weighing loan programs, the FHA vs. conventional comparison prices both side by side.

How to use this calculator

1. Enter the home price and down payment. The down payment slider shows the dollar amount underneath. Below 20%, PMI switches on automatically.
2. Set the rate and term. Use the rate from a current loan estimate rather than an advertised rate, which often assumes points paid up front and top-tier credit.
3. Fill in taxes, insurance, and dues. Take property tax from the county assessor or the listing, insurance from a real quote, and HOA dues from the listing. These three often add 20 to 30% to principal and interest.
4. Read the verdict and the spec row. The verdict gives the full monthly payment and the lifetime interest. Each figure carries a note number that links to its formula below, worked with your numbers.
5. Try extra principal. Add a monthly amount under "Pay it off sooner" and the verdict switches to the interest saved and the time cut from the loan. The schedule below redraws with the faster payoff.
6. Read the schedule. Switch between the chart and the table to see each year's principal, interest, and remaining balance.

Formulas & methodology

Every figure in the tool comes from the formulas below, and each note shows the working with the numbers you entered. The math runs in your browser; nothing you type is sent anywhere.

With extra principal, the calculator walks the loan month by month: it charges a month of interest on the current balance, applies the rest of the payment plus your extra amount to principal, and repeats until the balance reaches zero. PMI ends in the first month the balance falls to 78% of the purchase price, which is when federal law requires automatic cancellation. Taxes, insurance, and dues are held flat for simplicity.

Worked example

Take a $400,000 home with 10% down, a 30-year fixed rate of 6.25%, $3,600 a year of property tax, and $2,100 of homeowners insurance. The down payment is $40,000, so the loan is $360,000.

Principal and interest come to $2,217 a month. Taxes add $300, insurance $175, and PMI at 0.5% adds $150, for a full payment of $2,842. PMI drops off after 8 yrs 10 mo, which cuts the payment to $2,692. Over 30 years the loan charges $437,969 of interest, 122% of the amount borrowed.

Add $200 a month of extra principal and the loan is paid off in 24 yrs instead of 30 years, saving $102,222 of interest.

How amortization works

A fixed-rate mortgage is built so the payment never changes, which forces the interest to come first. In the example, the first year's payments include $22,381 of interest and only $4,218 of principal. Principal does not overtake interest until year 20; from then on, each payment builds more equity than it pays the lender.

That front-loading is why the first years of a loan feel slow, and why refinancing restarts the clock: a new 30-year loan puts you back at the interest-heavy start of the curve. It is also why extra payments are most powerful early. A dollar of principal paid in year one removes that dollar from the balance for every remaining month, along with all the interest it would have accrued.

The term changes the shape. At 15 years and a rate half a point lower, the same loan costs $2,989 a month in principal and interest, $773 more, but only $178,106 of interest in total.

Ways to pay less

• Reach 20% down, or plan the path to 78%. PMI is pure cost. If you can't avoid it, ask whether lender-paid or single-premium options are cheaper for how long you'll keep the loan.
• Shop the rate on the same day. Rates move daily. Compare loan estimates from at least three lenders on the same day with the same points so the quotes are comparable.
• Challenge the tax assessment. Many counties reassess at sale. A successful appeal or a homestead exemption lowers escrow for every year you own the home.
• Re-shop insurance every year. Premiums have risen sharply in many states, and the cheapest carrier at closing is often not the cheapest at renewal.
• Prepay principal. Most conforming loans carry no prepayment penalty. A fixed monthly extra, or one extra payment a year, shortens a 30-year loan by years.
• Compare with renting. The cheapest mortgage is still a cost. The rent vs. buy calculator shows whether owning beats renting over the years you expect to stay.

Mortgage FAQ

How is a mortgage payment calculated?

The principal and interest part uses the standard amortization formula: M = L × r ÷ (1 − (1 + r)^−n), where L is the loan amount, r is the annual rate divided by 12, and n is the number of monthly payments. Lenders then add one-twelfth of the yearly property tax and homeowners insurance, any private mortgage insurance, and HOA dues to reach the payment you actually make each month.

What is included in a monthly mortgage payment?

Usually four things, known as PITI: principal, interest, property taxes, and homeowners insurance. Taxes and insurance are collected into an escrow account that your servicer pays on your behalf. If you put less than 20% down on a conventional loan you also pay private mortgage insurance, and condos and many newer subdivisions add homeowners association dues, which you normally pay to the association directly.

How much does $100 extra a month save on a mortgage?

It depends on the rate and the balance, but on a 30-year loan the effect is large because every extra dollar skips decades of compounding interest. On a $360,000 loan at 6.25%, $100 a month extra saves nearly $59,000 of interest and ends the loan three years and four months early. Set the extra-principal slider in the calculator to see the exact figure for your loan.

When does PMI go away?

Under the Homeowners Protection Act, your servicer must cancel PMI automatically once the scheduled balance reaches 78% of the home's original value, and you can ask for it to be removed at 80% if you have a good payment history. Extra payments reach those points sooner. FHA mortgage insurance follows different rules: it lasts 11 years with at least 10% down and the life of the loan with less.

Is a 15-year or a 30-year mortgage better?

A 15-year loan usually carries a rate about half a point lower and costs far less interest, but the payment is much higher because the balance is repaid in half the time. A 30-year loan keeps the required payment low and lets you prepay when you choose. Many borrowers take the 30-year for flexibility and add extra principal; the calculator shows how close that gets to a 15-year payoff.

Mortgage Calculator by state

Each state edition starts from that state's typical home price, rent, property tax, and insurance, with a worked example and notes on local rules.

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