How to use this mortgage calculator
- Enter the home price and down payment. You can type the down payment in dollars or as a percent of the price.
- Enter your interest rate and loan length. Most people choose a 30-year loan. A 15-year loan has a higher payment but costs far less interest.
- Add property tax and insurance. These are usually paid through your mortgage each month, so they belong in the payment.
- Optionally add an extra monthly payment to see how much sooner you would be debt-free.
How your monthly payment is calculated
The principal and interest part of a fixed-rate mortgage uses the standard amortization formula, where P is the loan amount, r is the monthly interest rate (annual rate ÷ 12) and n is the number of monthly payments:
M = P × r(1 + r)n ÷ ((1 + r)n − 1)
For a $320,000 loan at 6.5% over 30 years, that comes to about $2,023 a month. Property tax and insurance are added as one-twelfth of their yearly cost, then PMI and HOA dues on top.
Property tax
Tax depends on where you live. Rates range from under 0.5% of the home’s value a year in some states to over 2% in others. Check your county assessor’s site, or a listing’s tax history, for a closer figure.
Private mortgage insurance (PMI)
PMI protects the lender when you put down less than 20%. It typically costs 0.3% to 1.5% of the loan a year, depending on your credit score and down payment. It ends once your balance reaches 78% of the original home value.
Why extra payments matter
Early in a loan, most of each payment goes to interest. Extra principal paid then shrinks the balance sooner, which cuts interest for every remaining month. The balance chart above shows the difference.
Frequently asked questions
What is included in a monthly mortgage payment?
Most payments include principal and interest, plus property tax and homeowners insurance collected through an escrow account. If you put down less than 20% on a conventional loan, PMI is usually added, and HOA dues apply in some communities.
When does PMI go away?
On a conventional loan, lenders must cancel PMI automatically once your balance is scheduled to reach 78% of the original home value. You can usually ask to remove it earlier, at 80%. This calculator assumes the automatic 78% cutoff.
How much do extra payments save?
Extra principal reduces the balance that interest is charged on, so each extra dollar saves interest for the rest of the loan. Enter an amount in step 4 to see the interest saved and the new payoff date.
Is this the exact payment my lender will quote?
No. It is an estimate. Your actual payment depends on your final rate, local tax assessment, insurance quote, PMI rate and any lender fees.