Mortgage Calculator

How is a monthly mortgage payment calculated?

Monthly mortgage payments use the PMT (Payment) formula: M = P × [r(1+r)^n] / [(1+r)^n - 1], where P is the loan amount (home price minus down payment), r is the monthly interest rate (annual rate ÷ 12), and n is the total number of monthly payments (years × 12). For example, a $280,000 loan at 6.5% for 30 years: r = 0.065/12 = 0.005417, n = 360, giving M = $1,769.63 per month.

What is included in a mortgage payment?

A full mortgage payment (often called PITI) includes: Principal — the portion that reduces your loan balance; Interest — the cost of borrowing; Property Taxes — usually 1-2% of home value annually; and Insurance — homeowners insurance to protect the property. If your down payment is less than 20%, you may also pay PMI (Private Mortgage Insurance), typically 0.5-1% of the loan amount per year. HOA fees apply if the property is in a homeowners association.

How much should my down payment be?

The standard down payment is 20% of the home price, which avoids PMI (Private Mortgage Insurance). However, many loan programs accept lower amounts: FHA loans require as little as 3.5%, conventional loans can go as low as 3-5%, and VA/USDA loans may require 0% down. A larger down payment reduces your monthly payment and total interest. For a $350,000 home, 20% down ($70,000) saves thousands compared to 5% down ($17,500) due to lower loan amount and no PMI.

What is the difference between 15-year and 30-year mortgages?

A 15-year mortgage has higher monthly payments but significantly lower total interest. For a $280,000 loan at 6.5%: a 30-year term costs $1,770/month with $357,125 total interest, while a 15-year term costs $2,439/month but only $159,038 total interest — saving you $198,087. The 15-year rate is typically 0.5-1% lower too, making the savings even greater. Choose 30 years for lower monthly costs, or 15 years to save on interest.

What is PMI and when is it required?

PMI (Private Mortgage Insurance) is required when your down payment is less than 20% of the home price. It protects the lender if you default on the loan. PMI typically costs 0.5% to 1% of the entire loan amount per year, added to your monthly payment. For a $300,000 loan, PMI could add $125-$250/month. PMI is automatically removed once your loan balance reaches 78% of the original home value, or you can request removal at 80%.

How much house can I afford?

The general guideline is the 28/36 rule: spend no more than 28% of your gross monthly income on housing costs (mortgage + tax + insurance), and no more than 36% on total debt. For example, with a $6,000/month gross income, your maximum housing payment should be about $1,680/month. At 6.5% interest for 30 years, that supports roughly a $300,000-$330,000 home with 20% down, depending on taxes and insurance in your area.

How does the interest rate affect my payment?

Interest rate has a dramatic effect on your monthly payment and total cost. On a $300,000, 30-year loan: at 5% you pay $1,610/month ($279,767 total interest), at 6.5% you pay $1,896/month ($382,633 total interest), and at 8% you pay $2,201/month ($492,480 total interest). Each 1% increase in rate adds roughly $200-300/month and $70,000-$110,000 in total interest over the life of the loan.

Is this mortgage calculator accurate?

Yes. This calculator uses the standard PMT amortization formula used by banks and lenders. The principal and interest calculation is exact. Property tax and insurance estimates are approximations — your actual costs depend on your location, insurer, and assessment. All calculations run entirely in your browser for privacy. For a formal pre-approval, contact a licensed mortgage lender.