Mortgage Payment Calculator

• The loan payment is usually only 65%–75% of what you actually send each month. Tax and insurance make up the rest.
• Every figure here comes from the standard amortization formula, which is written out below in full.
• PMI is included automatically when the down payment is under 20%, and removed at the loan-to-value ratio you choose.
• The Advanced tab models extra payments, biweekly schedules, HOA dues and closing costs.

How to use this calculator

In Basic mode you need six numbers, and five of them are on any listing page. The home price and your intended down payment set the loan amount. The interest rate is the note rate a lender quotes you — not the APR, which folds fees into a single figure and will give you a payment that is slightly too high. The loan term is almost always 30 or 15 years. Property tax and insurance are annual figures; the calculator divides them by twelve.

If you do not know the property tax, your county assessor publishes both the assessed value and the millage rate, and most listing sites show the previous year's actual tax bill. Using a percentage of the purchase price is a rough substitute, and a poor one in states where assessments reset on sale.

Advanced mode adds the things that change the answer materially:

• PMI rate and removal point. Private mortgage insurance is charged as an annual percentage of the loan. The calculator applies it monthly while the balance exceeds the loan-to-value ratio you select, then stops.
• HOA dues. Not part of the mortgage, but part of what you must pay to live there, and lenders count it in your debt-to-income ratio.
• Closing costs. Excluded from the monthly payment, included in the total outlay figure.
• Extra payments. A monthly amount, an annual lump sum, or an accelerated biweekly schedule.

Results update as you type. The charts show the payment split, the balance over time with and without your extra payments, and how the principal-versus-interest ratio shifts across the life of the loan.

The formula behind the payment

A fixed-rate mortgage is a level-payment amortizing loan. The payment is the amount that, applied every month at a constant interest rate, reduces the balance to exactly zero on the final payment. The standard annuity formula gives it directly:

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

M = monthly principal and interest payment
P = loan amount (price − down payment)
i = annual interest rate ÷ 12
n = number of monthly payments (years × 12)

On a $360,000 loan at 6.5% over 30 years, i is 0.0054167 and n is 360, which produces a payment of $2,275.44. That number never changes on a fixed-rate loan. What changes is how it is divided.

Each month, the interest due is the outstanding balance multiplied by the monthly rate. Whatever is left of the payment reduces the balance:

interest_this_month  = balance × i
principal_this_month = M − interest_this_month
new_balance          = balance − principal_this_month

In month one of that example, interest is $360,000 × 0.0054167 = $1,950 and only $325.44 reduces the balance. By month 180 the split is roughly even. By the final year almost the entire payment is principal. This is not a fee structure that front-loads interest — it is the arithmetic consequence of charging interest on a balance that starts large and ends at zero.

The full monthly outlay adds the escrowed and non-escrowed items:

Total monthly = M
              + annual property tax ÷ 12
              + annual home insurance ÷ 12
              + PMI (while LTV > threshold)
              + HOA dues
              + any extra principal you choose to pay

A worked example

Take a $450,000 home with $90,000 down — a 20% down payment, so no PMI. The loan is $360,000 at 6.5% over 30 years. Property tax is $5,400 a year and insurance is $1,800.

Over the full 30 years, total interest is about $459,000 — more than the loan itself. The house costs $450,000; the financing costs slightly more again.

Now change one thing: add $250 a month to principal. The loan clears in roughly 24 years instead of 30, and total interest falls by around $110,000. The $250 is not earning a return in any conventional sense; it is avoiding an interest charge of 6.5% on money that would otherwise have stayed borrowed. Guaranteed, and equivalent to a 6.5% pre-tax return with no market risk.

Change a different thing: put 10% down instead of 20%. The loan becomes $405,000, the payment rises to $2,560, and PMI at 0.5% adds about $169 a month until the balance falls to 80% of the original value — roughly nine years in at the scheduled payment. That is around $18,000 of PMI paid for the privilege of buying nine years earlier with less cash. Whether that is worth it depends entirely on what happens to prices in the meantime, which nobody knows.

Why your real payment changes even on a fixed-rate loan

A common surprise for first-time buyers: the payment goes up, on a loan that was supposed to be fixed. The interest rate has not changed. The escrow account has.

Most lenders collect property tax and insurance monthly and pay the bills on your behalf. Once a year they run an escrow analysis: they compare what they collected against what the bills actually were, and adjust. If your county raised the assessment, or your insurer raised the premium — which many have, substantially, in areas exposed to storms and wildfire — your monthly payment rises to match, and you may owe a shortage from the year just gone.

This calculator holds tax and insurance flat, because projecting them is guesswork. Treat the figure it produces as a starting point, and expect the tax-and-insurance portion to grow over time. On a 30-year horizon that growth can be substantial, and it is the part of your housing cost you have the least control over.

Assumptions and limitations

Being clear about what a model does not do is more useful than adding features to it.

• The rate never changes. This models a fixed-rate loan. An adjustable-rate mortgage behaves entirely differently after its fixed period ends.
• Tax and insurance stay flat. They will not. See above.
• PMI removal is by loan-to-value on the original price. Federal law requires automatic termination at 78% of the original value on most loans, and allows you to request removal at 80%. Some lenders will use a new appraisal if the home has appreciated; some will not. FHA loans follow different rules and often carry mortgage insurance for the life of the loan.
• Extra payments are assumed to reach principal immediately. Some servicers hold extra money as a prepaid instalment instead. Instruct them in writing, on every payment.
• No maintenance, utilities or furnishing costs. A common planning figure for maintenance is 1% of the home's value a year, which on a $450,000 house is $375 a month that this calculator does not show.
• No tax treatment of mortgage interest. Since the standard deduction was raised, most households receive no separate tax benefit from mortgage interest, because their total itemised deductions do not exceed it. The Rent vs. Buy calculator models that properly if you do itemise.

Common mistakes

Budgeting on principal and interest alone. The most frequent error, and the most expensive. A $2,275 loan payment is a $2,875 housing payment before a single repair.

Using the APR as the interest rate. APR includes fees amortised over the loan term. It is designed for comparing offers, not for calculating a payment. Using it here overstates your payment slightly.

Assuming a 15-year loan is always better. It carries a lower rate and far less total interest, but a much higher payment. A 30-year loan with voluntary extra payments gives you nearly the same outcome with the option to stop paying extra in a bad month. That flexibility has real value, and the rate difference is the price of it.

Treating the maximum you are approved for as a budget. Lenders underwrite on gross income and on ratios that ignore childcare, retirement contributions, commuting and everything else. The Home Affordability calculator lets you set your own comfort level rather than the lender's maximum.

Ignoring how long you will stay. Buying and selling costs roughly 8%–10% of the price combined. On a three-year stay that is a substantial hurdle for appreciation to clear before ownership beats renting.

Frequently asked questions