How to use this calculator
Enter your home price, down payment, loan term, and interest rate. Optionally include taxes and insurance for a complete monthly cost estimate. Click Calculate to see your full payment breakdown and amortization schedule.
Mortgage Calculator
Estimate your monthly mortgage payment including taxes, insurance, and other costs.
Annual Taxes & Costs
About Mortgage Loans
A mortgage is a loan secured by real estate property. The lender provides funds to purchase a home, and the borrower repays the loan — plus interest — over a fixed term, typically 15 or 30 years. Each monthly payment covers both interest and a portion of the principal (loan balance). Understanding how mortgages work is one of the most important steps in the home-buying process.
How Is a Monthly Mortgage Payment Calculated?
The standard formula for calculating a fixed-rate monthly mortgage payment is: M = P × [r(1+r)^n] / [(1+r)^n − 1], where P is the principal loan amount, r is the monthly interest rate (annual rate ÷ 12), and n is the total number of payments (loan term in years × 12). For example, a $300,000 loan at 7% annual interest over 30 years results in a monthly P&I payment of approximately $1,996.
Understanding Amortization
Amortization is the process of paying off a loan through regular scheduled payments. In the early years of a mortgage, the majority of each payment goes toward interest rather than principal. Over time, this ratio shifts — by the final years of the loan, most of each payment reduces the principal balance. This is why making extra payments early in the loan term has the greatest impact on reducing total interest paid.
Principal & Interest vs. Total Monthly Cost
The P&I payment is only part of your total monthly housing cost. Most lenders require you to also pay into an escrow account for property taxes and homeowner's insurance. If your down payment is less than 20%, you'll also owe Private Mortgage Insurance (PMI), which typically costs 0.5–1.5% of the loan amount annually. HOA fees and other costs can further increase your total monthly obligation.
Fixed-Rate vs. Adjustable-Rate Mortgages
A fixed-rate mortgage locks in your interest rate for the entire loan term, providing payment stability and predictability. A 15-year fixed mortgage builds equity faster and saves significantly on total interest, while a 30-year fixed offers lower monthly payments and greater cash flow flexibility. An adjustable-rate mortgage (ARM) starts with a lower introductory rate that adjusts periodically based on a market index, which can be beneficial if you plan to sell or refinance before the rate adjusts.
How Much House Can You Afford?
Financial advisors commonly recommend the 28/36 rule: your total housing costs (mortgage, taxes, insurance) should not exceed 28% of your gross monthly income, and your total debt payments should not exceed 36%. For a household earning $7,000/month, this means a maximum housing payment of about $1,960. Use this calculator to test different loan amounts, down payments, and interest rates to find a payment that fits comfortably within your budget.
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Mortgage Tips
- →A 20% down payment eliminates PMI and reduces your monthly payment significantly.
- →A 15-year mortgage builds equity faster and saves tens of thousands in interest.
- →Even one extra payment per year can shorten a 30-year loan by 4–5 years.
- →Shop at least 3 lenders — a 0.5% rate difference on a $400K loan saves ~$50K over 30 years.
Compare amortized, deferred, and bond loan types.