Mortgage Calculator

What the Mortgage Calculator Does

This mortgage calculator estimates your monthly payment, the total interest you will pay over the life of a home loan, and a full amortization schedule. You enter the loan amount (the amount you borrow after your down payment), the annual interest rate, and the loan term in years.

It is useful for first-time buyers comparing budgets, current homeowners weighing a refinance, and anyone who wants to see how the rate and term change the cost of a mortgage. The result tells you what the lender charges to repay the loan itself — a starting point for deciding what you can afford.

How It Works: The Amortization Formula

A fixed-rate mortgage is paid down using the standard amortization formula. Each payment covers all the interest accrued that month, and whatever is left reduces the principal. Early payments are mostly interest; later payments are mostly principal.

The monthly payment M is calculated as:

M = P × [ r(1 + r)^n ] / [ (1 + r)^n − 1 ]

Here P is the loan principal, r is the monthly interest rate (the annual rate divided by 12), and n is the total number of payments (years × 12). Total interest is simply (M × n) − P. This calculator covers principal and interest only.

Worked Example

Suppose you borrow 300,000 at a 6% annual interest rate over 30 years.

First convert the inputs: r = 0.06 / 12 = 0.005 per month, and n = 30 × 12 = 360 payments. Plugging in: (1.005)^360 ≈ 6.0226, so M = 300,000 × (0.005 × 6.0226) / (6.0226 − 1) ≈ 1,798.65 per month.

Over 360 payments that totals about 647,515, meaning roughly 347,515 in interest — more than the original loan. Shortening the term to 15 years raises the payment to about 2,531 but cuts total interest to roughly 155,683, saving close to 192,000.

What the Calculator Excludes

The monthly figure here is principal and interest only. Your actual housing payment is usually higher because lenders often collect several other costs in an escrow account alongside the loan payment.

Items not included in this calculation:

• Property tax, which varies widely by location and home value
• Homeowners insurance, required by virtually all lenders
• Private mortgage insurance (PMI), typically charged when your down payment is under 20%
• HOA or condo fees, where applicable
• Closing costs and lender fees paid upfront

Overpayments and the Effect of Rate and Term

Paying extra each month goes straight to principal, which shrinks the balance interest is charged on and shortens the term. On the 300,000 example above, adding 200 a month would pay the loan off years early and save tens of thousands in interest. Check that your loan has no prepayment penalty first.

Two factors drive the cost most. A higher interest rate increases every payment and compounds over decades, so even a 0.5% difference is significant. A longer term lowers the monthly payment but increases total interest because you borrow for longer — the trade-off shown clearly by the 15-year versus 30-year comparison.

Tips and Common Mistakes

Use this tool to compare scenarios, then add escrow costs separately to judge true affordability.

• Enter the loan amount after your down payment, not the full home price
• Make sure the rate is the annual percentage — the calculator converts it to monthly for you
• Budget for taxes, insurance and PMI on top of the result; these can add hundreds per month
• Compare the APR, not just the rate, when shopping lenders, since APR reflects fees
• Re-run the numbers for different terms before committing to see the long-term interest cost