Mortgage Calculator

How this mortgage calculator works

This calculator turns your home price, down payment, interest rate, and loan term into a monthly payment, using the same amortization formula lenders use internally. Add your annual property tax and homeowners insurance and it will also estimate your full monthly housing payment, not just principal and interest.

The mortgage payment formula

The standard fixed-rate mortgage payment formula is:

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

M = your monthly payment (principal and interest)
P = loan principal (home price minus down payment)
r = monthly interest rate (annual rate ÷ 12)
n = total number of monthly payments (loan term in years × 12)

Step-by-step: how to calculate your monthly payment

Subtract your down payment from the home price to get the loan principal (P).
Divide your annual interest rate by 12 to get the monthly rate (r). A 6.5% rate becomes 0.065 ÷ 12 = 0.00542.
Multiply your loan term in years by 12 to get the number of payments (n). 30 years = 360 payments.
Plug P, r, and n into the formula above to get your principal and interest payment.
Divide your annual property tax and homeowners insurance by 12 and add them to get your full estimated monthly payment.

Worked example

Say you’re buying a $350,000 home with a $70,000 (20%) down payment, a 6.5% interest rate, and a 30-year term:

Loan principal: $350,000 − $70,000 = $280,000
Monthly rate: 6.5% ÷ 12 = 0.00542
Number of payments: 30 × 12 = 360
Monthly principal and interest: ≈ $1,770
Total paid over 30 years: ≈ $1,770 × 360 = ≈ $637,100
Total interest paid: ≈ $637,100 − $280,000 = ≈ $357,100

Add $3,500/year property tax and $1,400/year insurance ($408/month combined) and the full estimated monthly payment comes to roughly $2,178.

Common mortgage calculation mistakes

Forgetting taxes and insurance. Principal and interest is usually only 70-85% of your real monthly payment.
Using the wrong rate type. Your interest rate (used for payment math) and your APR (which includes lender fees) are not the same number.
Ignoring PMI. If your down payment is under 20%, most lenders add private mortgage insurance until you reach 20% equity.
Comparing loans by monthly payment alone. A longer term can lower your payment while increasing your total interest paid significantly.

Tips for a lower mortgage payment

Increase your down payment to shrink the loan principal and potentially avoid PMI.
Compare rates from at least 3-4 lenders; even 0.25% makes a real difference over 30 years.
Consider a 15-year term if you can afford the higher payment; you’ll pay drastically less total interest.
Improve your credit score before applying; it’s one of the biggest levers on your rate.
Ask about discount points, prepaying interest upfront in exchange for a lower rate, if you plan to stay long-term.

Does this calculator include PMI (private mortgage insurance)?

No. This calculator estimates principal, interest, property tax, and homeowners insurance. If your down payment is below 20%, budget an additional 0.5% to 1.5% of your loan amount per year for PMI until you can request its removal.

What’s the difference between my interest rate and my APR?

Your interest rate is used to calculate the payment itself. Your APR (Annual Percentage Rate) includes the interest rate plus most lender fees and closing costs, spread over the loan term, which is why APR is usually slightly higher and is the better number for comparing loan offers.

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

A 30-year term gives you a lower monthly payment and more flexibility. A 15-year term has a higher monthly payment but a lower interest rate and dramatically less total interest paid. The right choice depends on your monthly budget and how much you value paying off the loan faster.

What is escrow and why is it added to my payment?

Escrow is an account your lender uses to collect your property tax and insurance in monthly installments, then pay those bills on your behalf when they’re due. It’s included in most mortgage payments so you don’t have to save for tax and insurance bills separately.

How much down payment do I actually need?

Conventional loans often allow down payments as low as 3-5%, FHA loans as low as 3.5%, and some VA and USDA loans allow 0%. A 20% down payment is not required, but it typically avoids PMI and results in a lower monthly payment.