How to use the Mortgage Calculator
- Enter the home price and your down payment as a percentage of the price.
- Enter the interest rate and the loan term in years. A 30-year loan is common, and 15 years is the usual shorter option.
- Enter your yearly property tax as a percentage of the price and your yearly home insurance cost.
- Read the total monthly payment, then compare the split between principal and interest and the tax and insurance part.
- Use the rate table below the calculator to see how a change in rate affects the payment.
Formula used
Monthly principal and interest = L × r × (1 + r)ⁿ ÷ ((1 + r)ⁿ − 1), where L is the loan, r is the monthly rate (yearly rate ÷ 12) and n is the number of months. Property tax and insurance are added as one twelfth of their yearly cost.
Worked example
Here is the Mortgage Calculator worked through with the example values shown above, so you can check each step by hand.
| Inputs | |
|---|---|
| Home price | $400,000 |
| Down payment | 20 % |
| Interest rate (per year) | 6.5 % |
| Loan term | 30 years |
| Property tax (per year) | 1.1 % of price |
| Home insurance (per year) | $1,500 |
| Result | |
| Total monthly payment | $2,514.28 |
| Principal and interest | $2,022.62 |
| Property tax and insurance | $491.67 |
| Loan amount | $320,000 |
| Total interest over the loan | $408,142 |
Payment at different interest rates
The default home with a 20% down payment and a 30-year term, at different rates.
| Interest rate (per year) | Principal and interest | Total interest over the loan |
|---|---|---|
| 5.5 % | $1,816.92 | $334,093 |
| 6 % | $1,918.56 | $370,682 |
| 6.5 % | $2,022.62 | $408,142 |
| 7 % | $2,128.97 | $446,428 |
| 7.5 % | $2,237.49 | $485,495 |
How the monthly payment is calculated
The principal and interest part of a fixed-rate mortgage uses the amortisation formula: payment = L × r × (1 + r)ⁿ ÷ ((1 + r)ⁿ − 1). L is the loan amount, r is the monthly interest rate (the yearly rate divided by 12) and n is the number of monthly payments. For a $400,000 home with 20% down, the loan is $320,000. At 6.5% over 30 years, principal and interest come to $2,022.62 a month.
Property tax and insurance are added on top. With a tax rate of 1.1% of the price ($4,400 a year) and insurance of $1,500 a year, they add $491.67 a month, so the total monthly payment is $2,514.28. Over the full 30 years the interest alone comes to $408,142, which is more than the amount borrowed.
What a different rate does to the payment
Rates have a large effect because interest is charged on a big balance for a long time. On the same $320,000 loan, principal and interest are $1,816.92 at 5.5%, $1,918.56 at 6%, $2,128.97 at 7% and $2,237.49 at 7.5%. Moving from 6.5% to 7.5% adds about $215 to every monthly payment and $77,353 to the total interest.
This is why even a quarter-point difference between lenders is worth the time to compare. Ask for quotes on the same day and the same loan type, because rates change daily.
Down payment, term and what changes the cost
A larger down payment shrinks the loan. With 10% down on the same house, the loan is $360,000 and principal and interest are $2,275.44; with 30% down the loan is $280,000 and the payment is $1,769.79. A smaller down payment also often comes with extra costs such as mortgage insurance, which this calculator does not include.
A shorter term raises the payment but cuts the interest sharply. At 15 years and the same rate, principal and interest rise to $2,787.54, yet total interest falls to $181,758, compared with $408,142 for 30 years. If you can afford the higher payment, a shorter term is a cheaper loan; if you cannot, a 30-year loan keeps the payment manageable, and you can still pay extra when you have spare cash.
Costs this calculator does not include
A real monthly housing cost can include more than the four items here. Private mortgage insurance (PMI) is often required when the down payment is below about 20%. Homeowners’ association fees, utilities, maintenance and repairs are not part of the loan payment but are part of the cost of owning a home. Property taxes and insurance also change over time, so your payment can rise even with a fixed-rate loan if those are collected in escrow.
You will also pay one-time closing costs, which are separate from the down payment and vary by location and lender. Treat the result as a planning estimate, not a loan offer.
How much house can you afford?
A common rule of thumb is that housing costs should stay below about a quarter to a third of gross monthly income, and that your total debts, including the mortgage, should stay within the limits lenders set. Use the debt-to-income calculator on this site to test your ratio with the payment from this page.
Whatever the rule says, check your own budget. A payment that fits the formula can still be tight if you also have childcare, commuting costs or little emergency savings.
Frequently asked questions
How is a mortgage payment calculated?
The principal and interest part uses the standard amortisation formula based on the loan amount, monthly rate and number of payments. Property tax and insurance are added as one twelfth of their yearly cost.
Does this calculator include PMI or HOA fees?
No. Private mortgage insurance and association fees are not included. If either applies to you, add the monthly amount to the result.
Is a 15-year or 30-year mortgage better?
A 15-year loan has a higher payment but much lower total interest. A 30-year loan has a lower payment and more flexibility. Choose by what your budget can carry comfortably.
How much does the interest rate matter?
A lot. On a typical loan, one extra percentage point adds many thousands of dollars in interest over the term. Use the rate table on this page to see the effect.
Are the results exact?
They are estimates for a fixed-rate loan with equal monthly payments. Your lender’s figures may differ because of fees, rounding, taxes and escrow rules.
Can I use this outside the United States?
Yes. Use the currency selector to change the symbol and number format. The calculation is the same for any fixed-rate, fully amortising loan, but the tax and insurance lines should reflect your local rules.
This calculator gives estimates for information only. Actual figures from a bank, employer, tax authority or doctor may differ. It is not financial, tax, legal or medical advice.