Mortgage Calculator
Calculate monthly mortgage payments, total interest, and amortization schedule.
What Is the Mortgage Calculator?
The Mortgage Calculator computes your monthly mortgage payment using the standard amortization formula. It takes the home price, down payment, annual interest rate, and loan term to calculate the exact monthly payment, the total amount paid over the life of the loan, and the total interest cost.
Formula
How to Use
Enter the home price, the down payment (in dollars), the annual interest rate (e.g., 6.5 for 6.5%), and the loan term in years (typically 15 or 30). Click Calculate to see the monthly payment, total paid, and total interest.
Example Calculation
Home price: $350,000 Down payment: $70,000 (20%) Loan amount: $280,000 Annual rate: 6.5% → r = 0.065/12 = 0.005417 Term: 30 years → n = 360 months M = 280000 × [0.005417 × (1.005417)³⁶⁰] / [(1.005417)³⁶⁰ − 1] M ≈ $1,770/month Total paid ≈ $637,200 | Total interest ≈ $357,200
Understanding Mortgage
The mortgage payment formula is a classic financial application of the time value of money — the idea that money available today is worth more than the same amount in the future because of its potential earning capacity.
The formula assumes a fixed interest rate (fixed-rate mortgage). Adjustable-rate mortgages (ARMs) have rates that change periodically, making the payment unpredictable after the initial fixed period.
One powerful strategy is making extra principal payments. Even one extra payment per year significantly reduces the loan term and total interest paid. For example, on a $300,000 30-year mortgage at 6%, making one extra annual payment can reduce the term by about 4–5 years.
Frequently Asked Questions
What is amortization?
Amortization is the process of paying off a loan through regular payments. Early payments are mostly interest; over time, more of each payment goes toward principal. An amortization schedule shows this breakdown month by month.
Does this include property tax and insurance?
No. This calculator shows principal and interest (P&I) only. Your actual monthly housing cost also includes property taxes, homeowner's insurance, and possibly PMI if your down payment is less than 20%.
What is PMI?
Private Mortgage Insurance (PMI) is required when the down payment is less than 20% of the home price. It typically costs 0.5–1.5% of the loan amount per year, added to your monthly payment.
Is a 15-year or 30-year mortgage better?
A 15-year mortgage has higher monthly payments but much lower total interest (often less than half). A 30-year mortgage has lower monthly payments but costs significantly more in interest over the life of the loan.
What is a good interest rate?
Mortgage rates vary with the market, credit score, and loan type. Historically, rates have ranged from 3% to 8% for 30-year fixed mortgages. A higher credit score typically earns a lower rate.