How to use the mortgage calculator
- Enter the home price and your down payment in dollars. The loan amount is the difference between the two.
- Enter the interest rate your lender quoted (the annual rate, not the APR) and the loan term in years. Most US home loans are 30 or 15 years.
- Add the yearly property tax and home insurance, plus any monthly HOA fee. These are not part of the loan, but you usually pay them every month together with it.
- Read the estimated monthly payment on the right. It updates as you type. Open the yearly amortization schedule to see how each year's payments split between interest and principal.
How the monthly payment is calculated
The principal and interest part of a fixed-rate mortgage uses the standard amortization formula. It finds the one fixed payment that pays off the loan exactly by the end of the term:
M = P × r(1 + r)ⁿ / ((1 + r)ⁿ − 1)
- M — monthly principal and interest payment
- P — loan amount (home price minus down payment)
- r — monthly interest rate (annual rate ÷ 100 ÷ 12)
- n — number of monthly payments (years × 12)
Property tax and insurance are divided by 12 and added to M, together with the HOA fee, to give the full monthly housing cost. Lenders often call this PITI: principal, interest, taxes and insurance.
Worked example
You buy a $400,000 home with $80,000 down (20%), so you borrow P = $320,000. The rate is 6.5% for 30 years, so r = 0.065 ÷ 12 ≈ 0.005417 and n = 360. Putting those into the formula gives a principal and interest payment of about $2,022.62. Add $4,000 a year of property tax ($333.33 a month) and $1,500 a year of insurance ($125 a month) and the total is about $2,481 per month.
Over 30 years you pay roughly $408,000 in interest — more than the amount you borrowed. In the first month, $1,733.33 of the payment is interest and only about $289 reduces the balance. That is why the amortization schedule shows the balance falling slowly at first and faster in later years.
15-year vs 30-year mortgage
With the same $320,000 loan at 6.5%, a 15-year term costs about $2,788 a month, but total interest drops to about $182,000 — a saving of more than $225,000. Lenders usually offer a lower rate on 15-year loans as well; at 5.75% the payment is about $2,657 and total interest about $158,000. A 30-year loan keeps the required payment lower, which gives you more room in your budget. Enter both terms above and compare.
Tips to save on your mortgage
- Put 20% down if you can. With a conventional loan, a smaller down payment usually adds private mortgage insurance (PMI), which this calculator does not include.
- Shop several lenders. Half a percentage point matters: the same $320,000 loan at 6.0% instead of 6.5% saves about $104 a month and $37,000 over 30 years.
- Pay a little extra principal. Adding $200 a month to the example loan pays it off in about 23½ years and saves around $105,000 of interest.
- Check the real tax bill. Property tax varies widely by state and county. Use the figure from the listing or the county assessor, not a national average.
Results are estimates for planning only and are not financial advice. Your lender's Loan Estimate will include closing costs, PMI, escrow and other details specific to you.
Frequently asked questions
What is included in the monthly payment?
Principal and interest, plus optional property tax, home insurance and HOA fees if you enter them.
How can I lower my monthly mortgage payment?
A larger down payment, a lower interest rate or a longer loan term all reduce the monthly payment, although a longer term increases total interest paid.
Is this an official loan quote?
No. It is an estimate for planning. Your lender's quote may differ because of fees, PMI and your credit profile.