Mortgage Calculator

How the mortgage payment is calculated

First subtract the down payment from the purchase price. This is the amount borrowed, assuming no fees are financed. A fully amortizing fixed-rate loan uses a level scheduled principal-and-interest payment. Each month’s interest is based on the remaining balance; the rest reduces the debt. [1]

L is the loan amount, r the monthly rate, n the number of payments and M the scheduled monthly principal-and-interest payment. At 0% interest, M = L ÷ n. Taxes and insurance are outside this formula.

The calculator rounds interest and cash payments to cents each month and adjusts the last payment to clear the balance. Lender schedules may differ by a few cents because of rounding or by more if they use daily interest, unusual first-payment periods or different loan terms.

Worked example: $400,000 home, 20% down

This is an arithmetic illustration, not a market-rate quote.

What is included in the estimate?

Principal, interest and recurring ownership costs

Principal repays the amount borrowed; interest is the borrowing charge. Annual property tax and homeowners insurance inputs are divided by 12 as monthly budget amounts. An escrow account may collect them with the mortgage, but paying them separately does not remove the expense. [2] HOA dues are also included in this tool’s budget total, although they are usually paid to the association separately. [3]

A fixed interest rate fixes the scheduled principal-and-interest payment, not every housing expense. Tax assessments, insurance premiums and association dues can change. This model holds your entered costs constant; it does not forecast increases.

PMI is a separate, editable assumption

Private mortgage insurance protects the lender and is commonly required on conventional loans with a down payment below 20%. Enter your quoted monthly premium and expected number of payments. The tool does not infer a premium from your credit score or stop it automatically at a loan-to-value threshold. [4]

For many eligible conventional mortgages, borrowers can request cancellation at 80% of original value subject to conditions; automatic termination generally occurs at the scheduled 78% point if payments are current. Extra payments do not guarantee immediate automatic removal. Confirm the timing with your servicer, then adjust the PMI duration here. FHA, VA and lender-paid insurance have different rules. [5]

Interest rate versus APR

Enter the contractual interest rate. APR includes certain fees and other borrowing costs, so substituting it into the payment formula can misstate the monthly installment. Compare both the rate and APR in actual Loan Estimates, along with fees and the loan term. [6]

How extra payments change the result

The extra-principal amount is added every month from the first payment. It lowers the balance sooner, reducing future interest and shortening the repayment period. The comparison uses the same loan with and without that extra amount; the original scheduled payment is not reduced or recast.

Ask your servicer to apply extra money to principal. Check whether your contract has a prepayment penalty, especially before a large payoff or refinance. Small additional principal payments often do not trigger one, but the contract controls. [7] This calculator excludes penalties, recast fees and the opportunity cost of using the cash elsewhere.

What a longer loan term changes

At the same loan amount and interest rate, a longer term lowers the scheduled monthly payment but increases total interest. A shorter term does the reverse. Real lender quotes may offer different rates for different terms; edit both inputs when comparing offers.

Costs and loan types outside this model

The monthly total excludes maintenance, repairs, utilities and special assessments. Down payment is shown separately, and closing costs are not included in schedule totals. Cash needed at closing can also include lender fees, points, prepaid interest and initial escrow deposits, with credits or deposits affecting the final amount. Use your lender’s disclosures to calculate cash to close. [8]

This tool models one fixed-rate, monthly amortizing loan. It does not model adjustable-rate changes, interest-only periods, balloon payments, second mortgages, refinances or program-specific FHA/VA/USDA charges. U.S. monthly-rate assumptions may not match mortgages in other countries. It does not assess credit eligibility, debt-to-income limits or whether a payment fits your household budget.