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Mortgage Calculator

A mortgage is usually the largest single financial commitment a household will make, so a small change in rate, term, or down payment can shift the lifetime cost by tens of thousands of dollars. This calculator gives you a realistic monthly payment estimate that includes principal, interest, property tax, and home insurance, so you can compare loan scenarios side-by-side before you talk to a lender, place an offer, or refinance an existing mortgage.

The principal amount you need to borrow (home price minus down payment).

The annual mortgage interest rate.

The mortgage term in years. Common terms are 15 and 30 years.

The estimated annual property tax (optional).

The estimated annual home insurance premium (optional).

Use this mortgage calculator to estimate the full monthly cost of owning a home, not just the loan repayment. Most online mortgage calculators only show principal and interest, which understates the real cost by anywhere from 15% to 30% once you factor in property taxes and homeowners insurance. This tool computes the standard amortized loan payment and then layers monthly tax and insurance on top, giving you the same PITI total (principal, interest, taxes, insurance) that a lender uses when evaluating affordability. The default values reflect a typical mid-priced U.S. home with a 30-year fixed-rate mortgage at current market rates, and you can change any input to model your own situation. The calculator works for purchase, refinance, and second-home scenarios, and it is equally useful for first-time buyers checking whether a home fits their budget and for current owners exploring whether a 15-year refinance would be worthwhile.

How It Works

Mortgage Payment Formula

M = P x [r(1+r)^n] / [(1+r)^n - 1]

Monthly payment equals the loan principal multiplied by the monthly interest rate compounded over the full term, divided by the same compounded factor minus one.

M is the monthly principal and interest payment - this is the amount the lender uses when amortizing the loan.

P is the loan principal, the amount you actually borrow after the down payment is applied to the home price.

r is the monthly interest rate, calculated as the annual rate divided by 12. A 6% annual rate becomes 0.5% per month, or 0.005 in the formula.

n is the total number of monthly payments over the life of the loan: 360 for a 30-year mortgage, 180 for a 15-year mortgage.

The numerator r(1+r)^n captures how interest compounds across the entire term, and the denominator (1+r)^n - 1 normalizes that compounding into a level monthly payment.

Property tax and insurance are not part of this core formula; lenders typically collect them as escrow and add the monthly equivalent (annual amount divided by 12) to your principal-and-interest payment.

Important Notes:

  • •This calculator uses the standard fully-amortized fixed-rate mortgage formula. The same formula is used by U.S. lenders for conventional, FHA, VA, and USDA loans, and it produces a level monthly payment that gradually shifts from mostly-interest to mostly-principal as the loan ages.
  • •Property taxes are entered as an annual figure and divided by 12. Real-world property tax bills vary widely by state and by county - high-tax states like New Jersey and Illinois can run 2% or more of home value per year, while low-tax states like Hawaii and Alabama are often under 0.5%.
  • •Home insurance is entered as an annual premium and divided by 12. Premiums depend heavily on location, dwelling cost, deductible, and coverage limits, and are usually higher in coastal and wildfire-prone areas. Get an actual quote before relying on a default estimate.
  • •PMI (Private Mortgage Insurance) is not included in the calculation. Most conventional loans with less than 20% down require PMI, which typically costs 0.3% to 1.5% of the original loan amount per year and is added to the monthly payment until you reach 20% equity.
  • •HOA dues, condo fees, flood insurance, mortgage life insurance, and special assessments are not included. If your prospective home has any of these, add them manually to the monthly payment to get a complete picture.
  • •Closing costs are not part of the monthly payment but typically run 2% to 5% of the loan amount and are paid at closing. Plan for these separately when budgeting for a home purchase.
  • •This tool assumes a fixed interest rate for the full term. Adjustable-rate mortgages (ARMs) start with a fixed introductory rate and then reset periodically, so the monthly payment shown here only applies during the introductory period for an ARM.
  • •Total interest and total cost figures assume you make every scheduled payment on time and never pay extra principal. Making even one extra payment per year on a 30-year mortgage typically shaves 4-5 years off the loan and saves tens of thousands in interest.

Worked Example

A first-time buyer is purchasing a $375,000 home with a 20% down payment ($75,000), financing the remaining $300,000 with a 30-year fixed-rate mortgage at 6.5%. The county property tax bill is $3,600 per year and a homeowners insurance quote came in at $1,200 per year.

Inputs:

  • loan Amount:300,000
  • annual Interest Rate:6.5
  • loan Term Years:30
  • property Tax Annual:3,600
  • insurance Annual:1,200

Result:

The monthly principal and interest payment is approximately $1,896.20. Adding $300 per month in property tax and $100 per month for insurance brings the total monthly housing payment (PITI) to approximately $2,296.20. Over the full 30-year term, the buyer will pay roughly $382,632 in interest on top of the original $300,000 borrowed, for a total mortgage repayment of about $682,632. If the same buyer chose a 15-year mortgage instead, the monthly principal and interest would rise to about $2,613, but total interest would drop to roughly $170,366 - a savings of more than $212,000 in interest at the cost of about $717 more per month.

Who Is This Calculator For?

  • first-time home buyers
  • current homeowners considering a refinance
  • real estate agents helping clients
  • anyone comparing 15-year vs 30-year mortgage scenarios

Frequently Asked Questions

A 15-year mortgage has higher monthly payments but dramatically less total interest because the principal is paid off twice as fast and lenders typically offer a lower interest rate on shorter terms. On a $300,000 loan at current rates, the 15-year option might save more than $200,000 in lifetime interest compared with the 30-year. The 30-year remains the most common choice in the U.S. because the lower payment leaves room for other goals like retirement contributions, college savings, and an emergency fund. There is no universally correct answer - the right term depends on how much monthly cushion you have and what you would do with the difference.
Conventional loans can accept as little as 3-5% down, FHA loans typically require 3.5%, and VA and USDA loans often allow zero down for eligible borrowers. A 20% down payment is the threshold that lets you avoid Private Mortgage Insurance and usually unlocks a slightly better interest rate. However, putting more down means tying up cash that might be more valuable as an emergency fund, an investment, or a buffer for closing costs and moving expenses. Many financially healthy buyers put 10-15% down and direct the difference toward other goals.
PMI (Private Mortgage Insurance) is an insurance policy that protects the lender, not you, in case you default on the loan. It is typically required on conventional loans whenever your down payment is less than 20% of the home price. PMI usually costs between 0.3% and 1.5% of the original loan amount per year, depending on your credit score and loan-to-value ratio, and it is added to your monthly mortgage payment. Once you build 20% equity in the home through payments and appreciation, you can usually request that PMI be removed, and lenders are required to automatically cancel it once you reach 22% equity based on the original purchase price.
Paying extra principal each month can shorten the loan and save substantial interest. On a 30-year mortgage at 6.5%, even a $200 monthly extra payment can shave off roughly seven years and save tens of thousands of dollars in interest. The financial trade-off is whether you could earn a better return investing that money instead - if your mortgage is at 6.5% and your retirement account averages 8% over the long run, investing usually wins on paper. The non-financial considerations matter too: paying down the mortgage offers a guaranteed return, reduces stress, and frees up cash flow earlier in life.
The principal-and-interest portion of your payment is calculated using the standard amortization formula: M = P x [r(1+r)^n] / [(1+r)^n - 1], where P is the loan principal, r is the monthly interest rate (annual rate divided by 12), and n is the total number of monthly payments. Property tax and homeowners insurance are added on top as escrow, calculated by dividing the annual amount by 12. If you have PMI or HOA fees, those are also added to the monthly total. The full payment with all components is what lenders call PITI - principal, interest, taxes, and insurance.
Mortgage payments are amortized so that each monthly payment is the same amount, but the split between interest and principal changes over time. In the first month, the lender charges interest on the entire outstanding balance, so most of the payment goes to interest and only a small slice reduces principal. As the principal slowly shrinks, the interest charge each month falls and a larger portion of the level payment goes toward principal. On a 30-year loan, you typically do not cross the halfway point of paying off the principal until around year 19 or 20.
A fixed-rate mortgage locks in the same interest rate for the entire term, so your principal-and-interest payment is identical from month one to the final payment. An adjustable-rate mortgage (ARM) starts with a fixed introductory rate, often for 5, 7, or 10 years, and then resets periodically based on a market index. ARMs usually offer a lower starting rate, which can save money if you plan to sell or refinance before the reset, but they expose you to the risk of significantly higher payments later. For most buyers planning to stay long-term, a fixed-rate mortgage is the safer choice.
The principal-and-interest calculation is mathematically exact for any fixed-rate amortized loan and matches what a lender will quote to the cent. The total monthly payment depends on how accurate your property tax and insurance inputs are - default values are reasonable national averages, but your actual figures may differ by hundreds of dollars per month. The calculator does not include PMI, HOA fees, flood insurance, or other variable costs, so use the result as a strong starting estimate and then confirm the exact figures with your lender's loan estimate before closing.
Refinancing can lower your monthly payment, shorten your term, or both, but it comes with closing costs that typically run 2% to 5% of the loan balance. A common rule of thumb is that refinancing makes sense if you can lower your interest rate by at least 0.5% to 1% and you plan to stay in the home long enough to recover the closing costs through monthly savings - often called the break-even point. Plug your current loan balance, new rate, and remaining term into this calculator, compare the new monthly payment to your current one, then divide the closing costs by the monthly savings to find the break-even period in months.

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Last updated: April 25, 2026