Mortgage Calculator

A mortgage is a long-term loan used to finance the purchase of a home. The monthly payment is determined by the loan principal (home price minus down payment), the annual interest rate, and the term length in years. Our mortgage calculator uses the standard amortization formula to compute a fixed monthly payment that fully pays off the loan by the end of the term.

The formula behind the scenes is M = P · r · (1 + r)ⁿ / ((1 + r)ⁿ − 1), where P is the loan amount, r is the monthly interest rate (annual rate ÷ 12), and n is the total number of monthly payments (years × 12). In the early years of a mortgage, most of each payment goes toward interest; over time, more of each payment is applied to the principal. The amortization table below the results lets you see this shift year by year.

Use the calculator to compare different scenarios. Increasing your down payment lowers the principal and saves significant interest over the life of the loan. A shorter term (15 years vs. 30 years) raises the monthly payment but dramatically reduces total interest. Even a 0.5% difference in interest rate can translate to tens of thousands of dollars over a 30-year loan.

Note that the figures shown are principal and interest only. Your actual monthly housing cost will also include property taxes, homeowners insurance, and possibly private mortgage insurance (PMI) if your down payment is less than 20%. HOA fees may apply for condos and planned communities. Always factor these into your budget when deciding how much home you can afford. For an official quote, contact a licensed mortgage lender — this tool is for educational planning purposes.

Beyond the basic calculation, smart homebuyers compare multiple loan structures before committing. Fixed-rate mortgages give predictable payments for the entire term and protect you from rising rates, which is ideal during low-rate environments or for buyers who plan to stay in the home long-term. Adjustable-rate mortgages (ARMs) typically start with a lower introductory rate but reset periodically based on a benchmark index — these can save money if you plan to move or refinance before the adjustment period begins, but they add interest-rate risk.

Down payment strategy deserves careful thought. Putting 20% down avoids private mortgage insurance (PMI), which can cost between 0.5% and 2% of the loan balance per year. However, draining your entire emergency fund to reach 20% is risky — most lenders accept lower down payments with PMI, and you preserve cash for repairs, closing costs, and unexpected expenses. First-time buyer programs, FHA, VA, and USDA loans all offer reduced down payment options for qualifying buyers.

Closing costs typically run 2–5% of the loan amount and include lender fees, title insurance, appraisal, escrow, and prepaid taxes and insurance. Many buyers overlook these costs when budgeting. Use this calculator alongside a closing cost estimate from your lender to understand the true cash needed at signing. You can sometimes negotiate seller concessions to cover part of these costs in a buyer's market.

Refinancing is worth considering whenever rates drop by 0.75 percentage points or more, you plan to stay in the home long enough to recoup closing costs (the break-even point), and your credit score has improved. Cash-out refinances also let you tap home equity, but they extend your debt — weigh the trade-off carefully. Run this calculator with different scenarios before locking in a rate.