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Mortgage Calculator — Home Loan Payment Calculator

Calculate home loan payments including PMI and property taxes

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Mortgage Calculator: Home Loan Payment Calculator

Table of Contents - Mortgage

How to Use This Calculator - Mortgage

Enter the Home Price—the purchase price of the property.

Enter your Down Payment as a dollar amount or percentage.

Enter the Interest Rate (APR) offered by your lender.

Select the Loan Term: 15 years, 20 years, or 30 years are common options.

Optionally add:

  • PMI annual percentage if down payment is under 20%
  • Property Tax annual amount
  • Home Insurance annual premium
  • HOA Fees monthly amount

Click "Calculate" to see results. The output displays principal and interest payment, escrow amounts, PMI payment, total monthly payment, total interest over the loan life, and an amortization schedule.

The Core Principle: Amortized Home Loans

A mortgage is an amortized loan—fixed payments over time gradually pay down principal while covering interest. The same payment amount applies throughout, but allocation between principal and interest shifts.

The payment formula: PMT = P × [r(1+r)^n] / [(1+r)^n - 1]

Where P is loan amount, r is monthly rate (APR/12), and n is total payments.

Early years are interest-heavy. On a 30-year loan, the first payment might be 70% interest, 30% principal. Later years are principal-heavy—by year 25, payments might be 30% interest, 70% principal.

This structure means extra payments early in the loan have outsized impact—they reduce the principal that accrues interest for decades.

How to Calculate Mortgage Payments Manually

Example: $300,000 loan at 6% for 30 years

P = $300,000, r = 0.005, n = 360 months

P&I Payment: PMT = $300,000 × [0.005 × 6.023] / [5.023] = $1,798.65

Total repayment: $1,798.65 × 360 = $647,514 Total interest: $647,514 - $300,000 = $347,514

Adding escrow (taxes $3,600/yr, insurance $1,200/yr): Monthly escrow = $400 Total payment = $2,198.65

PMI (if applicable, 0.5% of loan): Monthly PMI = $125 Total with PMI = $2,323.65

Real-World Applications

Affordability assessment. Calculate what payment you can afford (28% or less of gross income), then work backwards to determine maximum home price.

Comparing loan options. 15-year versus 30-year: shorter term has higher payments but dramatically less total interest.

Refinance analysis. Calculate monthly savings, multiply by remaining term, subtract closing costs.

Extra payment strategy. Adding $200/month to a $300,000 mortgage at 6% saves $89,000 in interest.

Pre-approval preparation. Understand what you'll commit to monthly at various price points.

Scenarios People Actually Run Into

The total cost shock. Your $300,000 home costs $647,514 total. You pay more in interest than the original loan. This is normal but surprising to first-time buyers.

The PMI elimination goal. You pay $150/month PMI. Once you reach 20% equity, request removal—saving $1,800/year.

The escrow adjustment. Property taxes increased, creating an escrow shortage. Payments increase to cover the shortfall.

The refinance math. Refinancing from 7% to 5.5% saves $350/month but costs $8,000 in closing. Breakeven: 23 months.

The 15 versus 30 debate. 30-year at 6%: $1,799/month, $347K interest. 15-year at 5.5%: $2,451/month, $141K interest. Save $206K with the higher payment.

Trade-Offs and Decisions People Underestimate

Term length impact. 30-year loans have lower payments but cost nearly twice as much in interest as 15-year loans.

Rate versus points. Pay points upfront for a lower rate. Good if you'll keep the loan long enough to recoup costs.

Fixed versus adjustable. ARMs start lower but can increase. Assess your risk tolerance.

Larger down payment. More down means lower payment, no PMI (at 20%+), and less interest. But it depletes savings.

Prepayment versus investing. Extra mortgage payments guarantee return equal to your rate. Investments might return more historically.

Common Mistakes and How to Recover

Ignoring total cost. Monthly payment fits budget, but total interest is staggering. Always calculate total cost.

Forgetting taxes and insurance. P&I is just part of housing cost. Add property tax, insurance, PMI, and HOA.

Not shopping rates. 0.25% difference on $300,000 is $18,000+ over 30 years. Get multiple quotes.

Buying maximum approval. Lenders approve more than you should borrow. Their calculation doesn't account for other goals.

Ignoring closing costs. Closing costs run 2-5% of loan amount beyond your down payment.

Related Topics

Amortization schedule. Breakdown showing principal versus interest at each payment.

Private Mortgage Insurance (PMI). Required when down payment is under 20%. Can be removed at 20% equity.

Escrow account. Lender-held account for property tax and insurance.

Debt-to-income ratio (DTI). Total monthly debt payments divided by gross income. Lenders want 36-43% or less.

Loan-to-value ratio (LTV). Loan amount divided by property value. Higher LTV means higher risk.

How This Calculator Works

Loan amount:

loanAmount = homePrice - downPayment

Monthly P&I payment:

monthlyRate = annualRate / 12
payment = loanAmount × [monthlyRate × (1 + monthlyRate)^termMonths] / [(1 + monthlyRate)^termMonths - 1]

Escrow:

monthlyEscrow = (annualPropertyTax + annualInsurance) / 12

PMI:

monthlyPMI = (loanAmount × pmiRate) / 12

Total payment:

totalMonthly = payment + monthlyEscrow + monthlyPMI + monthlyHOA

Total interest:

totalInterest = (payment × termMonths) - loanAmount

All calculations happen locally in your browser.

FAQs

What's included in my monthly payment?

PITI: Principal, Interest, Taxes, and Insurance. Plus PMI if down payment is under 20%, and HOA fees if applicable.

How much house can I afford?

Housing costs should be 28% or less of gross income. On $6,000/month income, aim for $1,680 or less total housing payment.

What is PMI and how do I get rid of it?

PMI protects the lender if you default. Required under 20% down. Request removal at 20% equity; automatically removed at 22%.

Should I choose 15-year or 30-year?

15-year: higher payment, lower rate, much less interest. 30-year: lower payment, more flexibility, significantly more interest.

How much does interest rate affect my payment?

On $300,000 for 30 years: 5% = $1,610/month; 6% = $1,799/month; 7% = $1,996/month. Each point is roughly $200/month.

Should I make extra payments?

If your rate is high and you have emergency savings, extra payments save significant interest. Early in the loan has biggest impact.

What are points?

Prepaid interest to reduce your rate. One point = 1% of loan = approximately 0.25% rate reduction.

How accurate is this calculator?

Mathematically precise for fixed-rate mortgages. Actual payments may vary due to lender-specific rounding or fees.

What's the difference between pre-qualification and pre-approval?

Pre-qualification is a quick estimate based on self-reported information. Pre-approval involves document verification and a credit check, providing a more reliable loan amount. Sellers prefer pre-approved buyers.

How do adjustable-rate mortgages (ARMs) work?

ARMs have a fixed rate for an initial period (often 5, 7, or 10 years), then adjust periodically based on a market index. Initial rates are lower than fixed rates, but future payments are uncertain.

What's escrow and why do lenders require it?

Escrow accounts hold funds for property taxes and insurance. Lenders require them to ensure these bills are paid—unpaid taxes create liens, and uninsured property puts their collateral at risk. Monthly escrow payments smooth out large annual bills.

How does refinancing work?

Refinancing replaces your existing mortgage with a new one, typically at a lower rate. You pay closing costs (2-5% of loan) but save on monthly payments and total interest. Calculate break-even time before refinancing.

What's the difference between conforming and jumbo loans?

Conforming loans meet Fannie Mae/Freddie Mac limits (varies by area, typically $726,200+). Jumbo loans exceed these limits and often have stricter requirements and slightly higher rates.

How do I calculate how much I can save with extra payments?

Use the amortization schedule. Adding $100/month to a $300,000 mortgage at 6% saves approximately $50,000 in interest and shortens the loan by nearly 5 years. The earlier you start extra payments, the greater the impact.

What happens if I sell my home before the mortgage is paid off?

At closing, the sale proceeds first pay off your remaining mortgage balance. Any excess goes to you. If you owe more than the sale price (underwater), you must cover the difference or negotiate a short sale.

What's the impact of credit score on mortgage rates?

Significant. A score of 760+ typically qualifies for the best rates. Each 20-point drop can add 0.25-0.50% to your rate. On a $300,000 loan, the difference between excellent and fair credit could cost $100+/month and $40,000+ over the loan life.

How do I decide between renting and buying?

Calculate total monthly costs of owning (PITI + maintenance + opportunity cost of down payment) versus renting. Consider how long you'll stay—transaction costs typically require 3-5 years to break even. Factor in local market conditions, tax benefits, and personal preferences.

What are closing costs and who pays them?

Closing costs include appraisal, title insurance, attorney fees, origination fees, and prepaid items. Typically 2-5% of loan amount. Usually paid by the buyer, but negotiable. Some sellers offer closing cost assistance as a purchase incentive.

How does the mortgage interest deduction work?

In the US, mortgage interest on up to $750,000 of debt is tax-deductible if you itemize. This reduces the effective interest rate. However, many taxpayers benefit more from the standard deduction, especially with lower mortgage balances.

What's the difference between pre-qualification and pre-approval?

Pre-qualification is a quick estimate based on self-reported information—useful for initial planning. Pre-approval involves document verification and credit check, producing a more reliable commitment letter. Sellers prefer pre-approved buyers.

How do I compare different mortgage offers?

Calculate total cost: principal, interest over loan life, all fees, and ongoing costs (PMI duration). APR helps compare but doesn't capture everything. Create a spreadsheet comparing total 5-year cost and total lifetime cost for each option.

What factors determine my mortgage rate?

Credit score, down payment percentage, loan type (conventional, FHA, VA), loan term, property type, and market conditions. You control some factors (credit, down payment) but not others (market rates). Improve controllable factors before applying.

How do I know when I can afford to buy?

Beyond calculator math: stable employment, emergency fund intact after down payment, debt-to-income ratio below 36%, and confidence you'll stay in the area 3-5+ years. Numbers matter, but so does overall financial stability and life circumstances.

What is mortgage preapproval versus prequalification?

Prequalification is informal—a rough estimate. Preapproval involves document submission and credit check, producing a letter with specific amount and rate. Sellers take preapproval seriously; prequalification less so.

Additional Notes and Tips

This calculator processes all inputs locally in your browser, ensuring both privacy and instant results without data transmission. For specialized applications or complex planning scenarios, consider consulting professionals who can account for your specific circumstances and goals.