Mortgage Calculator

How to Use This Calculator

1. Enter the home price — the full purchase price of the property.
2. Set your down payment — the calculator shows the percentage automatically. 20% avoids PMI.
3. Choose your loan term — 30 years is most common, but 15 years saves significantly on interest.
4. Enter the interest rate — check with multiple lenders for the best rate. Even 0.25% makes a big difference over 30 years.
5. Try extra payments — see exactly how much interest you save and how many years you cut off the loan.

How Mortgages Work

A mortgage is a loan used to purchase real estate, where the property itself serves as collateral. Most mortgages are "fully amortizing," meaning each monthly payment covers both interest on the outstanding balance and a portion of the principal.

The standard monthly payment formula is:

Where M is the monthly payment, P is the loan principal, r is the monthly interest rate (annual rate ÷ 12), and n is the total number of monthly payments.

In the early years of a mortgage, the majority of each payment goes toward interest rather than principal. On a $280,000 loan at 6.5%, the first month's payment of $1,770 includes about $1,517 in interest and only $253 in principal. By year 20, those proportions have flipped — most of each payment reduces the principal.

This front-loading of interest is why extra payments early in the loan are so powerful. Every extra dollar paid in year 1 saves you from paying interest on that dollar for the remaining 29 years. A consistent extra payment of even $200/month can save tens of thousands in interest and shave years off your mortgage.

Frequently Asked Questions

How is a monthly mortgage payment calculated?

Your monthly payment is calculated using the formula: M = P[r(1+r)^n] / [(1+r)^n - 1], where P is the loan amount, r is the monthly interest rate, and n is the total number of payments. This formula ensures equal monthly payments over the life of the loan, with early payments being mostly interest and later payments being mostly principal.

How much should my down payment be?

A 20% down payment is the traditional recommendation because it avoids Private Mortgage Insurance (PMI), which typically costs 0.5–1% of the loan annually. However, many loan programs allow 3–5% down (FHA loans allow 3.5%). A larger down payment means a smaller loan, lower monthly payments, and less total interest paid.

Should I choose a 15-year or 30-year mortgage?

A 15-year mortgage has higher monthly payments but significantly less total interest — often less than half compared to a 30-year term. A 30-year mortgage offers lower monthly payments and more flexibility. If you can comfortably afford the 15-year payment, it saves substantial money long-term. A middle ground is a 30-year mortgage with extra payments.

How do extra payments reduce my mortgage?

Extra payments go directly toward reducing your principal balance. Since interest is calculated on the remaining balance, a lower balance means less interest each month. Even an extra $100/month on a $280,000 loan at 6.5% can save over $45,000 in interest and cut about 5 years off a 30-year mortgage.

What is an amortization schedule?

An amortization schedule is a complete table of all mortgage payments showing how each payment is split between principal and interest. In the early years, most of your payment goes to interest. As you pay down the principal, the interest portion shrinks and the principal portion grows. This is why the loan balance drops slowly at first and faster toward the end.

What factors affect mortgage interest rates?

Key factors include: your credit score (higher scores get better rates), down payment size (larger down payments may qualify for lower rates), loan term (shorter terms typically have lower rates), loan type (fixed vs. adjustable), property type, and current market conditions set by the Federal Reserve. Shopping multiple lenders can save 0.25–0.5% on your rate.

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