Mortgage Calculator
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Calculate your exact monthly mortgage payment: principal and interest, property tax and insurance, with total interest and total cost.
Quick answer: Monthly mortgage payment = P × [r(1+r)ⁿ] ÷ [(1+r)ⁿ − 1], where P is loan amount, r is the monthly interest rate, and n is total payments. A $320,000 loan at 7.5% over 30 years costs about $2,237/month in principal and interest alone, before tax and insurance.
How to Use the Mortgage Calculator
Enter the home price and down payment
Input the purchase price and your down payment amount. A down payment below 20% usually means PMI. This calculator does not include PMI, so add it by hand (see the PMI section below).
Set the interest rate and term
Enter the rate from your lender's quote, not an estimate, and get quotes from at least 3 lenders so you start from the best one. Even 0.25% changes the total interest paid by thousands. Choose a 15- or 30-year term; the difference in total interest is often $250,000–$350,000 on a large loan, depending on the loan size and rate.
Add tax and insurance
Input annual property tax and homeowner's insurance. These bring the payment from principal-and-interest to the true PITI (principal, interest, tax, insurance), the figure your lender uses for DTI qualification. HOA dues have no field here, so add them to the total by hand.
Review the interest you pay
Check the total interest and total cost boxes. In year one of a 30-year mortgage at today's rates, roughly 85–90% of each payment is interest (89% in the $400,000 example below), and extra principal payments shorten the loan and cut that interest.
How Mortgage Payments Are Calculated
Mortgage payments consist of principal (paying back the loan), interest (cost of borrowing), and often escrow payments for property tax and insurance. The principal and interest portion is calculated using the standard loan amortization formula.
📐 Mortgage Payment Formula
r = 7.5% / 12 = 0.00625; n = 360
M = $320,000 × [0.00625 × (1.00625)³⁶⁰] ÷ [(1.00625)³⁶⁰ − 1]
M = $320,000 × 0.006992 = $2,237/month
Amortization: Why You Pay Mostly Interest Early
In the early years of a mortgage, the vast majority of each payment goes to interest, not principal. Take a separate example: a $400,000 30-year mortgage at 7.5% has a first payment of ~$2,797, made up of about $2,500 in interest and only $297 in principal. By year 15, interest is still about two-thirds of each payment (about $1,891 of $2,797); the split reaches 50/50 around year 21. This is why extra principal payments early in the loan save substantial interest.
Mortgage Rates in 2026: What to Expect
Mortgage rates fluctuate based on Federal Reserve policy, inflation, and bond markets. After a period of elevated rates in 2023–2024 and a partial easing in 2025, rates have ticked back up in recent weeks; see the FAQ below for the current figure. Even a 0.25% rate difference on a $300,000 mortgage saves over $15,000 in total interest over 30 years.
Mortgage Calculators for Other Countries
Financing property in South Africa? South African home loans are called bonds, and unlike US mortgages, SA bond repayments are calculated on a variable prime-linked interest rate set by the South African Reserve Bank. Upfront costs also include transfer duty, conveyancing attorney fees, and bond registration charges. If you're looking to invest in property in South Africa, SA Property Tools provides SA-specific bond repayment calculators, transfer duty estimates, and a full suite of South African property tools.
Buying in Australia instead? Australian lenders quote home loan repayments weekly, fortnightly or monthly rather than monthly-only, and most prefer a 20% deposit to avoid Lenders Mortgage Insurance. Our Australia Mortgage Repayment Calculator covers all three repayment frequencies with the full amortization formula shown, and if you're buying to rent out, the Australia Rental Yield Calculator handles weekly rent and body corporate fees.
Investing in a UK rental property? UK lenders size a buy-to-let mortgage against the rent it can achieve, not your personal income, using a rental cover stress test rather than the standard affordability math used above. Our UK Buy-to-Let Mortgage Calculator runs that stress test alongside stamp duty and Section 24 tax relief in one tool.
15-Year vs 30-Year Terms
| Feature | 15-Year Mortgage | 30-Year Mortgage |
|---|---|---|
| Monthly payment | Higher (~30% more) | Lower |
| Total interest paid | Much less (often 50% less) | More |
| Interest rate | Typically 0.5–0.75% lower | Higher |
| Best for | Those who can afford higher payments | Cash flow flexibility |
PMI and Down Payments
Private Mortgage Insurance (PMI) is usually required on a conventional loan when your down payment is less than 20% of the home's purchase price. PMI typically costs somewhere around 0.5–1.5% of the loan amount per year (our estimate; your rate depends on credit score, down payment and insurer). On a $400,000 loan, that's $2,000–$6,000 per year ($167–$500/month). PMI protects the lender, not you; you can request its removal once you reach 20% equity, and lenders must automatically terminate it at 78% LTV under the Homeowners Protection Act even if you never ask.
Affordability
The standard guideline is the 28/36 rule: housing costs should not exceed 28% of gross monthly income, and total debt payments should not exceed 36%. For a $90,000 annual salary ($7,500/month), this means a maximum housing payment of $2,100/month. Use our Home Affordability Calculator for a precise figure.
How Extra Principal Payments Change a Mortgage: A Second Worked Example
Beyond the standard $320,000-at-7.5%-for-30-years example above, consider what happens when you add $200 extra to principal every month. The unmodified payment is $2,237.49 with $485,495 of total interest over 30 years. Simulating the balance with the extra $200 applied monthly, the loan pays off in exactly 23 years instead of 30, 7 years early, and total interest drops to approximately $351,983, a saving of roughly $133,512 for committing an extra $200 a month.
Why is an extra payment early in the loan worth more than the same extra payment made later?
Every dollar applied to principal today stops accruing interest for every remaining month of the loan: a $200 extra payment in month 1 saves interest across all 359 remaining months; the identical $200 paid in month 300 only saves interest for 60 remaining months. This is why even modest, consistent extra payments made from the start of a mortgage produce outsized interest savings compared with the same total extra dollars paid later or in a lump sum near the end.
Should You Choose a Fixed or Adjustable-Rate Mortgage?
What is the practical trade-off between a 30-year fixed and an ARM?
A fixed-rate mortgage locks in the same rate and the same $2,237.49 payment from the example above for the full term, regardless of what happens to interest rates afterward. An adjustable-rate mortgage (ARM) typically offers a lower introductory rate for a fixed period (commonly 5, 7, or 10 years) before adjusting periodically based on a benchmark index. ARMs can make sense for buyers confident they'll sell or refinance before the adjustment period ends; they carry real payment-uncertainty risk for anyone planning to stay long-term.
How much does a half-point rate difference actually matter?
On the $320,000, 30-year example, moving from 7.5% to 8.0% raises the monthly payment from $2,237.49 to roughly $2,348.05, about $110.56 more per month, or roughly $39,800 more in interest over the full term. Rate shopping typically costs nothing but a bit of time and routinely surfaces differences of a quarter to half a percentage point, making it one of the highest-value steps in the entire home-buying process.
When does refinancing this mortgage make sense?
Refinancing generally pays off when the new rate is low enough below the current one that the monthly savings recoup the closing costs (our estimate: typically 2–5% of the loan amount) within less time than you plan to keep the loan. On a $300,000 balance, refinancing costs of roughly $7,500 recouped by a $150/month payment reduction would take 50 months (about 4 years) to break even; a refinance only makes sense if you're confident you'll hold the loan well beyond that point.
Frequently Asked Questions
Sources & Methodology
Calculations are based on the most current publicly available data from authoritative government and industry sources: