Mortgage Calculator

How mortgage calculators work

FAQ

How is the monthly mortgage payment calculated?

The principal and interest (P&I) portion uses the standard amortization formula: M = P[r(1+r)^n] / [(1+r)^n - 1], where P is the loan amount, r is the monthly interest rate, and n is the total number of payments. Your total monthly payment (PITI) adds property taxes, homeowner's insurance, and PMI (if applicable) to the P&I amount.

What is PMI and when do I need it?

Private Mortgage Insurance (PMI) is required by most lenders when your down payment is less than 20% of the home price. PMI protects the lender if you default on the loan. It typically costs 0.3% to 1.5% of the original loan amount per year. Once you reach 20% equity in your home, you can usually request to cancel PMI.

How much should I put down on a house?

A 20% down payment is ideal because it eliminates PMI and gives you the lowest monthly payment. However, many loan programs allow 3% to 10% down. Putting down less means a higher monthly payment (due to a larger loan and PMI), but it lets you buy sooner and keep more cash for emergencies or investments. The right amount depends on your savings, local market, and how long you plan to stay.

15-year vs 30-year mortgage — which is better?

A 15-year mortgage has higher monthly payments but you pay dramatically less interest over the life of the loan and build equity faster. A 30-year mortgage has lower monthly payments, giving you more flexibility in your budget, but you pay roughly twice as much in total interest. Choose 15 years if you can comfortably afford the higher payment; choose 30 years if you need budget flexibility or plan to invest the difference.

How do extra payments affect my mortgage?

Extra payments go directly toward your principal, reducing both the total interest you pay and the time it takes to pay off the loan. Even modest extra payments can save tens of thousands of dollars in interest. For example, adding just $200/month to a $320,000 loan at 6.5% can save over $70,000 in interest and shorten your loan by 5+ years.

Are property taxes included in my mortgage payment?

Property taxes are not part of the loan itself, but most lenders require an escrow account where 1/12 of your annual property tax is collected with each monthly payment. The lender then pays the tax bill on your behalf. This ensures taxes are always paid on time. This calculator includes property taxes in the total monthly payment to give you a realistic picture of your housing cost.