Mortgage Calculator

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Written by Denny Ceizyk and Rene Bermudez | Edited by Crissinda Ponder | Reviewed October 27, 2022


 

Use our calculator to estimate your monthly mortgage payment amount based on the home price, mortgage term, down payment and interest rate info you enter.

How to calculate your mortgage payment

A mortgage calculator does all the complex math for you when you’re crunching monthly payment numbers to buy a home. Here’s how each field works:

Home price. If you’ve picked out a house at a specific price, enter that number here. You can also try a range of prices to see how they affect your payment.

Loan term. This is the number of years it’ll take to pay off your mortgage loan balance. Choose a 30-year fixed-rate term for the lowest possible payment or a 15-year term if you want to save interest and pay off the balance faster with a higher monthly payment.

Down payment. The more you put down, the lower your mortgage payment will be. If you make less than a 20% down payment, the calculator will estimate how much private mortgage insurance (PMI) you might pay (this insurance protects the lender in case you default).

Start date. The calculator will default to today’s date if you enter nothing here.

Home insurance. Lenders require you to have enough homeowners insurance to repair or replace your home if there’s a loss from something like a fire or theft. You can also comparison shop with multiple insurance companies to get the lowest premium.

Mortgage rate. The calculator will reflect the most commonly offered rates. You can check today’s mortgage rates for a more accurate number.

Property taxes. Your property taxes will vary based on your location. You can enter the exact figure if you have it to get a more precise monthly payment estimate.

HOA fees. If you live in a neighborhood governed by a homeowners association (HOA), add the monthly fee here.

Return to Mortgage Calculator

Monthly payment breakdown: Typical costs included in a mortgage payment

The calculator takes the following standard mortgage costs into account when calculating your payment:

  • Principal and interest. How much you’ll pay each month toward your mortgage balance and interest charges.
  • Property taxes. The calculator divides your annual property taxes by 12 to calculate this monthly amount.
  • Homeowners insurance. Your homeowners insurance premium is divided by 12 to calculate this monthly amount.
  • HOA dues. The monthly HOA fee is included here, if applicable.
  • PMI. If you make less than a 20% down payment, the estimated monthly PMI charge displays here.

The calculator will then show you your total monthly payment, which is the total amount you’ll pay each month, and the figure the lender will use to qualify you for home loan approval.

Total costs breakdown: Principal and interest over the life of a mortgage loan

It’s important to look beyond simply how much you’ll pay monthly when assessing a mortgage loan offer. The calculator will give you the following additional information, which can help you compare the true value of different loans:

Total loan amount The difference between your home price and down payment.

Total interest paid The amount of interest you’ll pay over your mortgage repayment term.

Total principal and interest payments The total dollar amount you’ll spend for all the expenses included in your monthly payment over the life of your mortgage.

The reason these numbers help us comparison shop is that savings in the short term — a low monthly payment — usually indicate a higher total cost over the life of a mortgage. A lengthier mortgage term stretches out your debt, resulting in lower monthly payments, but mortgage interest rates for a 10-year home loan will typically be lower than for a 15-year home loan, which in turn will carry lower rates than a 30-year home loan.

The table below shows what this tradeoff would look like for three different repayment terms for a $320,000 loan at today’s interest rates.

30-year loan15-year loan10-year loan
Monthly payment$2,056.41$2,683.08$3,463.33
Interest rate6.66%5.9%5.44%
Total interest$420,306.22$162,955.13$95,600.19
Total cost$740,306.22$482,955.13$415,600.19

As you can see, even small differences in how much you pay monthly can make radical changes in the total cost of a mortgage.

How to read a mortgage payment schedule

A mortgage amortization schedule may sound (and look!) a bit intimidating, but it’s really very simple. Think of it as a mortgage payment schedule but with a bonus: It also breaks down the equal installments you’ll pay over your mortgage term, showing how much of each payment goes toward principal versus interest. Some important things to understand about mortgage amortization:

  • You’ll pay more interest than principal during the initial years of your home loan repayment
  • You’ll eventually pay more in principal than interest over time
  • Your total principal and interest payment amount never changes
  • You’ll have paid off your mortgage balance when you make the last scheduled payment, unless you have an adjustable-rate mortgage (ARM)

Formula for calculating your mortgage payment

If you’re a math whiz and you’d prefer to make the calculations yourself, here’s the formula embedded in the mortgage calculator:

How a home loan calculator helps

There are a lot of decisions to make when you’re buying a home. A mortgage calculator can help you decide whether you should:
Make a larger down payment to get a lower monthly payment

Make a larger down payment to reduce your monthly PMI amount

Choose a shorter term to pay off your mortgage faster

Buy a home in a neighborhood with expensive HOA fees

Buy in an area with high property taxes

What our mortgage calculator tells you about your PITI

The acronym “PITI” is short for principal, interest, taxes and insurance — the four elements that make up your total mortgage payment. Although it’s not required, most homeowners prefer the convenience of having all four components included in their monthly payments.

A few things are worth noting about the PITI calculations included in our mortgage calculator:

Principal and interest calculations are only for 30- and 15-year fixed-rate terms. Ask your lender about 10-, 20- or 25-year fixed-term options, or ARM programs.

Property taxes may change yearly. The tax authorities in your area may adjust your tax rates, which could cause your PITI payment to fluctuate.

Homeowners insurance premiums can rise. Be prepared to shop around for homeowners insurance rates every year, especially if you see a jump in your premium.

You may cancel your PMI. Lenders only require PMI if you have less than 20% equity in your home. As your home’s value increases, ask your lender about options to remove your PMI.

HOA fees aren’t paid as part of your PITI. Although you’ll have to pay dues if your home is in an HOA community, lenders only use them to qualify you for your mortgage. You’ll pay the HOA fees directly to the association.

How much can you afford to borrow?

Lenders set limits on how much you can afford to borrow based on your debt-to-income (DTI) ratio — this is a measure of your total debt, including your new house payment, divided by your monthly earnings. Our mortgage calculator is based on conventional mortgage guidelines that typically cap your DTI ratio at 45%, although exceptions are possible to 50%.

Example Calculation

Here’s a quick example of how to determine whether you can afford a mortgage, assuming your monthly payment is $2,500 and you make $6,000 per month before taxes:

$2,500 monthly payment divided by $6,000 monthly income = 41.67% DTI ratio

Since the conventional DTI ratio maximum is 45% to 50%, you likely can afford this payment.

You can adjust the DTI ratio on a home affordability calculator to get an idea of home prices that fit within your budget.

How to lower your monthly mortgage payment

Try one or all of the following tips to get a smaller monthly mortgage payment:

Choose the longest term possible A 30-year fixed-rate home loan will give you the lowest payment compared to other shorter-term loans.

Make a bigger down payment Your principal and interest payments will drop with a smaller mortgage loan amount, and you’ll reduce your PMI expenses. With 20% down, you’ll eliminate the need for any PMI.

Consider an ARM If you only plan to live in your home for a few years, ask about an ARM. The initial rate is typically lower than fixed rates for a set time period; once the initial low-rate period ends, the rate can adjust based on the ARM term you choose.

Shop for the best rate possible Studies have shown that comparing quotes from three to five lenders can save you big on your monthly payment and interest charges over your mortgage term.