Mortgage Calculator
Mortgage Calculator
Estimate your monthly mortgage payment, total interest and total loan cost.
Mortgage Calculation Results
Year-by-Year Mortgage Breakdown
| Year | Starting Balance | Principal Paid | Interest Paid | Ending Balance |
|---|
What Is a Mortgage?
A mortgage is a loan used to purchase or refinance real estate. The property generally serves as security for the loan, and the borrower repays the amount borrowed over an agreed period with interest.
A typical mortgage payment can contain several components. The principal is the portion that reduces the outstanding loan balance, while interest is the cost of borrowing. Depending on the loan and location, borrowers may also pay property taxes, homeowners insurance, mortgage insurance and homeowners association fees.
How Does a Mortgage Calculator Work?
A mortgage calculator uses the home price, down payment, interest rate and loan term to estimate the amount borrowed and the regular principal-and-interest payment.
This calculator also allows you to enter optional property taxes, homeowners insurance, HOA fees and PMI. These additional amounts are shown separately and combined into an estimated monthly housing cost.
M = P × [r(1 + r)n] ÷ [(1 + r)n − 1]
Where:
M = Monthly principal and interest payment
P = Loan principal
r = Monthly interest rate
n = Total number of monthly payments
The calculator first subtracts the down payment from the home price to estimate the mortgage principal. It then applies the interest rate and loan term to estimate the monthly principal-and-interest payment.
What Is Principal?
Principal is the amount of money borrowed for the mortgage. For example, if a home costs $350,000 and the buyer makes a $70,000 down payment, the estimated mortgage principal would be $280,000 before considering other financing adjustments.
As mortgage payments are made, a portion of each payment generally goes toward reducing the principal. The remaining balance can therefore become smaller over time.
What Is Mortgage Interest?
Mortgage interest is the cost charged by the lender for providing the borrowed funds. The interest rate is usually expressed as an annual percentage, although mortgage payments are generally calculated on a monthly schedule.
At the beginning of a typical amortizing mortgage, a larger portion of the scheduled payment can go toward interest because the outstanding balance is at its highest. As the principal balance decreases, the interest portion generally decreases as well.
How Does a Down Payment Affect a Mortgage?
A down payment is the amount paid toward the purchase price from the buyer's own funds rather than borrowed through the mortgage.
A larger down payment generally means a smaller loan balance. A smaller mortgage can result in lower monthly principal-and-interest payments and less total interest over the life of the loan, assuming the interest rate and other terms remain unchanged.
How Does the Interest Rate Affect Monthly Payments?
The interest rate has a significant effect on mortgage costs. When the loan amount and term remain the same, a higher interest rate generally results in a higher monthly principal-and-interest payment and more interest paid over the full loan term.
Even a relatively small difference in the interest rate can have a meaningful effect on a long-term mortgage because interest is calculated over many monthly payments.
How Does the Loan Term Affect a Mortgage?
The loan term is the length of time scheduled for repayment. Common mortgage terms include 15 years and 30 years, although available terms vary by lender and market.
A longer loan term generally results in a lower required monthly principal-and-interest payment because the repayment is spread across more months. However, keeping the loan for the entire longer term can result in substantially more total interest.
What Are Property Taxes?
Property taxes are taxes charged by a local government or other applicable authority based on property ownership. They are separate from the mortgage principal and interest.
Some mortgage arrangements collect money for property taxes through an escrow account and include an estimated tax amount in the monthly payment. This calculator lets you enter annual property taxes to estimate their monthly effect.
What Is Homeowners Insurance?
Homeowners insurance can provide coverage for certain risks associated with owning a home, subject to the policy's terms, limits and exclusions.
Insurance costs vary significantly by property, location, coverage level and insurer. The amount entered into this calculator is only used as an estimate of the monthly insurance cost.
What Is PMI?
Private mortgage insurance, commonly called PMI, may apply to certain conventional mortgages when the borrower's down payment or equity level meets specific conditions.
PMI rules, costs and cancellation requirements vary. The calculator does not determine whether PMI is required; it simply allows you to enter an estimated monthly amount.
What Is an HOA Fee?
Homeowners association fees are charges that may apply to properties located within a homeowners association. These fees can help pay for shared services, maintenance and community amenities.
Not every property has an HOA fee, and the amount can vary. Enter zero if the property has no HOA charge.
How to Use This Mortgage Calculator
Start by entering the home's purchase price and planned down payment. Then enter the expected annual interest rate and loan term.
For a more complete monthly estimate, enter annual property taxes, annual homeowners insurance, monthly HOA fees and monthly PMI when applicable.
Click Calculate Mortgage to see the estimated monthly principal-and-interest payment, additional housing costs, total interest, total loan cost and year-by-year amortization breakdown.
Mortgage Payment vs. Total Monthly Housing Cost
The monthly mortgage payment shown by the calculator represents principal and interest. The estimated monthly housing cost adds the optional property tax, homeowners insurance, HOA and PMI amounts entered by the user.
This distinction is important because the amount required for the mortgage itself may be different from the total amount a homeowner spends each month on housing.
Important Mortgage Disclaimer
The results from this calculator are estimates for educational and planning purposes. Actual mortgage payments can differ because of lender terms, interest rates, fees, taxes, insurance costs, escrow requirements, loan type and other factors.
This calculator does not provide a mortgage offer, loan approval or financial advice. Before choosing a mortgage, review the official loan estimate and terms provided by the lender.
Frequently Asked Questions About Mortgages
What is a mortgage calculator?
A mortgage calculator is a financial tool that estimates mortgage payments using information such as the home price, down payment, interest rate and loan term.
Does the calculator include property taxes?
Yes. You can enter annual property taxes, and the calculator estimates their monthly amount and includes it in the estimated monthly housing cost.
Does this calculator include homeowners insurance?
Yes. Enter the estimated annual homeowners insurance cost to include an estimated monthly insurance amount in the total monthly housing cost.
What happens if I increase my down payment?
Increasing the down payment generally reduces the amount that needs to be borrowed. A smaller loan can reduce the monthly principal-and-interest payment and may reduce total interest when other assumptions remain unchanged.
Is a 15-year mortgage cheaper than a 30-year mortgage?
A 15-year mortgage can have higher monthly payments but may result in less total interest if the loan is kept for the full term. A 30-year mortgage generally spreads repayment over more months, which can reduce the scheduled monthly principal-and-interest payment.
Does this calculator calculate an amortization schedule?
Yes. After calculation, the tool provides a year-by-year breakdown showing starting balance, principal paid, interest paid and ending balance.
Can I use this calculator for refinancing?
You can use it to estimate payments for a new mortgage amount, interest rate and term. However, refinancing decisions may also involve closing costs, fees, existing loan balances and other factors that are not included in this basic estimate.
Are mortgage calculator results guaranteed?
No. The results are estimates based on the information entered. Your actual mortgage payment and total costs depend on the lender, loan agreement, taxes, insurance and other applicable charges.
Final Thoughts
A mortgage is one of the largest financial commitments many people make, so understanding the relationship between the loan amount, interest rate, down payment and repayment period is important.
The Money Master Blog Mortgage Calculator provides a convenient way to estimate monthly principal-and-interest payments and explore how additional housing costs can affect the overall monthly budget. Try different scenarios to compare loan amounts, rates and terms before making a decision.
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