How to use the mortgage calculator
The calculator opens with an example: a $400,000 home bought with 20% down, a 6.5% interest rate, repaid over 30 years. Change any value to match your situation.
- Home price and down payment. Enter the down payment as a percentage or as a dollar amount; the loan amount is the price minus the down payment.
- Interest rate and term. Use the rate from your loan estimate, not the APR, which also spreads fees over the loan.
- First payment month. Used only to show calendar dates in the results and the schedule.
- Property tax, insurance and HOA fees. Property tax is entered as a yearly percentage of the price, because that is how most counties set it. Check your local rate; it ranges from well under 1% to over 2% in the US.
- PMI rate. Charged only when the down payment is under 20%. Your lender quotes it as a yearly percentage of the loan.
- Extra principal, if you plan to pay more than the minimum each month.
The chart shows the balance falling over the life of the loan, alongside the principal you have repaid and the interest you have paid. The schedule below it gives the figures for each year.
How the monthly payment is calculated
The principal and interest part of the payment is fixed for the life of a fixed-rate loan, and comes from the standard amortization formula:
Each month, interest is charged on the remaining balance and the rest of the payment reduces the balance:
Principal this month = M − Interest this month
Total monthly payment = M + Tax ÷ 12 + Insurance ÷ 12 + PMI + HOA
A worked example
A $400,000 home with 20% down needs a loan of $320,000.00. At 6.5% over 30 years, principal and interest come to $2,022.62 a month.
Adding property tax of 1.1% a year and $1,800 of insurance brings the full payment to $2,539.28. With 20% down there is no PMI.
Over 360 payments you pay $408,142.36 in interest, so the loan costs $728,142.36 in total. The last payment falls in Nov 2056.
Where your payment goes over time
In the early years most of each payment is interest. In the first month of the example, $1,733.33 goes to interest and only $289.28 reduces the balance. Because interest is charged on the remaining balance, the split shifts a little every month: the principal share grows and the interest share shrinks, until the final years when almost the whole payment is principal.
This is why the balance falls slowly at first. After ten years of the 30-year loan in the example, you have repaid only 15% of what you borrowed. You can see the exact figures in the schedule under the calculator.
PMI: when you pay it and when it stops
Lenders usually require private mortgage insurance when the down payment is less than 20%, because the loan is riskier. PMI protects the lender, not you, so the sooner it ends the better.
With 10% down on the same home, the loan rises to $360,000.00 and PMI at 0.5% adds $150.00 a month, for a total payment of $2,942.11.
PMI ends when the balance reaches 78% of the original price, in Jan 2036, after 109 months. By then it will have cost $16,350.00.
You can usually request cancellation earlier, at 80%, and some lenders will remove PMI sooner if a new appraisal shows the home has risen in value.
How the rate and the term change the cost
| Loan | Principal & interest | Total interest |
|---|---|---|
| 30 years at 5.5% | $1,816.92 | $334,092.93 |
| 30 years at 6.5% | $2,022.62 | $408,142.36 |
| 30 years at 7.5% | $2,237.49 | $485,495.11 |
| 15 years at 6.5% | $2,787.54 | $181,757.84 |
Each percentage point on the rate changes the payment by roughly $200 a month on this loan, and the total interest by more than $70,000. In practice a 15-year loan usually carries a lower rate than a 30-year one, which widens the gap further.
Paying extra each month
Every extra dollar of principal stops interest from being charged on that dollar for the rest of the loan. Adding $200 a month to the example saves $105,428.67 in interest and clears the loan 6 yr 7 mo sooner. Before you prepay, check that your loan has no prepayment penalty and that you have an emergency fund, since money paid into the house is hard to get back out.
What this calculator does not include
- Closing costs: lender fees, title insurance and other charges at purchase, typically 2% to 5% of the price.
- Rate changes: an adjustable-rate mortgage changes its payment after the initial fixed period.
- Changes in tax and insurance: both tend to rise over time, so the escrow part of the payment usually grows.
- Tax deductions: mortgage interest may be deductible if you itemize, which lowers the after-tax cost.
Your lender’s loan estimate is the authoritative figure. Use this calculator to compare scenarios and to understand where the numbers come from.