Mortgage Calculator

How to Use the Mortgage Calculator

Start by entering the purchase price of the home. Then enter your down payment, annual mortgage interest rate, and loan term. The calculator uses these values to estimate your monthly principal and interest payment.

You can enter the down payment as either a percentage of the home price or as a dollar amount. Adjust the interest rate and loan term to compare different borrowing scenarios.

What Does the Mortgage Calculator Calculate?

The calculator provides several results that can help you understand the cost of a fixed-rate mortgage:

• Monthly principal and interest: Your estimated monthly payment toward the loan principal and interest.
• Loan amount: The amount borrowed after subtracting the down payment from the home price.
• Down payment: The amount paid toward the home upfront, shown as both a dollar amount and percentage.
• Total interest: The estimated interest paid over the entire loan term.
• Total payments: The combined amount of principal and interest paid over the life of the mortgage.

Mortgage Payment Formula

A standard fixed-rate mortgage uses the loan principal, monthly interest rate, and number of monthly payments to calculate the monthly principal and interest payment.

The formula is:

M = P × [r(1 + r)ⁿ] ÷ [(1 + r)ⁿ − 1]

In this formula, M is the monthly principal and interest payment, P is the loan principal, r is the monthly interest rate, and n is the total number of monthly payments.

The annual interest rate is converted to a monthly rate before the calculation. For example, a 6.5% annual rate corresponds to a monthly rate of 0.065 ÷ 12.

For a zero-interest loan, the calculator uses a separate calculation that divides the loan amount evenly across the number of monthly payments.

Mortgage Calculator Example

Suppose you purchase a $400,000 home with a 20% down payment, a 6.5% annual interest rate, and a 30-year loan term.

• Home price: $400,000
• Down payment: $80,000
• Loan amount: $320,000
• Interest rate: 6.5%
• Loan term: 30 years
• Monthly principal and interest: about $2,022.62

Over 30 years, the estimated total principal and interest payments would be about $728,142.36, including approximately $408,142.36 in interest.

This example represents principal and interest only. Your actual monthly housing cost may be higher when property taxes, homeowners insurance, mortgage insurance, HOA fees, and other housing expenses are included.

What Affects Your Mortgage Payment?

Several factors can significantly change the amount you pay each month and the total cost of your mortgage.

• Home price: A higher purchase price generally means a larger loan and higher payments.
• Down payment: A larger down payment reduces the amount you need to borrow.
• Interest rate: A higher interest rate increases both the monthly payment and the total interest paid.
• Loan term: A longer loan term can reduce the monthly payment but usually increases the total interest paid.

What Is Not Included in This Mortgage Calculator?

This calculator estimates principal and interest for a mortgage. It does not currently include property taxes, homeowners insurance, HOA fees, mortgage insurance, or other homeownership costs.

These additional expenses can make your actual monthly housing payment different from the principal and interest estimate shown by the calculator.

Frequently Asked Questions