How to use this mortgage calculator
- Home price: the purchase price of the property.
- Down payment: enter it in dollars or as a percentage of the price. Switch between the two with the selector; the calculator converts the number for you.
- Interest rate and term: the rate your lender quotes and the length of the loan (15, 20 or 30 years).
- Yearly costs: property tax, homeowners insurance, PMI and HOA dues, as yearly amounts. They're optional, but including them gives you the payment you'll actually make each month.
The results show your total monthly payment, how it splits between each cost, the loan amount, the total interest over the term and a year-by-year amortization schedule.
What's in a monthly mortgage payment
A mortgage payment is usually more than the loan repayment itself:
- Principal and interest repay the loan. This part stays the same every month on a fixed-rate mortgage.
- Property tax is set by your local government and is often collected monthly by the lender into an escrow account.
- Homeowners insurance protects the home against damage; lenders require it.
- PMI (private mortgage insurance) protects the lender when your down payment is small, typically under 20% on a conventional loan.
- HOA dues apply if the home is in a community with a homeowners association.
Taxes, insurance and HOA dues vary widely by location and property, so use figures from the listing, your county assessor or real quotes where possible.
How the payment is calculated
The calculator then adds one-twelfth of each yearly cost: property tax, insurance, PMI and HOA dues.
Worked example
Over 30 years, the principal and interest payments add up to about $728,142, which means roughly $408,142 in interest on top of the $320,000 borrowed. In the very first payment, $1,733.33 is interest and only $289.28 reduces the balance. The balance falls slowly at first and faster in later years, which you can see in the amortization schedule.
15-year vs 30-year mortgage
Choosing a shorter term is one of the biggest decisions you can make about total cost.
The 15-year loan costs about $765 more each month, but saves more than $226,000 in interest at the same rate. In practice, lenders often price shorter terms at a lower rate, which widens the gap further. The right choice depends on whether the higher payment leaves you enough for savings and emergencies.
Down payments and PMI
If you put less than 20% down on a conventional loan, the lender will usually require PMI. Its cost depends on your credit score, down payment and loan, so ask your lender for a quote and enter it as a yearly amount.
PMI doesn't last forever. Under US federal rules for most conventional loans, you can request cancellation when your balance reaches 80% of the home's original value, and it ends automatically when the balance is scheduled to reach 78%. With 10% down on the $400,000 home above (a $360,000 loan at 6.5%), the balance is scheduled to reach 80% of the price after about 7 years 11 months and 78% after about 9 years 1 month. The calculator shows this estimate whenever you enter a PMI amount. Extra principal payments reach these points sooner.
Government-backed loans work differently. FHA loans, for example, use their own mortgage insurance premium with separate rules, so check the terms of your specific loan.
Ways to lower your monthly payment
- Increase your down payment. A smaller loan means a smaller payment and, at 20% or more, usually no PMI.
- Improve your credit before applying. Your credit history has a major effect on the rate you're offered.
- Compare lenders. Get Loan Estimates from several lenders on the same day and compare the rate, points and fees.
- Look at the full cost of a home, not just its price. Two homes at the same price can have very different property taxes, insurance and HOA dues.
- Consider buying discount points only if you expect to keep the loan long enough for the upfront cost to pay off.
What this calculator doesn't include
The estimate covers the monthly payment on a fixed-rate mortgage. It does not include closing costs, moving costs, maintenance and repairs, utilities, or changes in property tax and insurance over time, which can raise an escrow payment in later years. Adjustable-rate mortgages will also differ once the rate resets. Use the result to compare scenarios, then confirm the details on your lender's Loan Estimate.