How to Use the Mortgage Calculator
Professional mortgage payment calculator for home loans. Estimate monthly payments including principal, interest, property tax, and insurance with detailed amortization schedule.
Step-by-Step Instructions
- Home Price: Enter the total purchase price of the property ($100,000 to $10,000,000+).
- Down Payment: Input the upfront payment amount. Typically 10-20% of home price to avoid PMI.
- Interest Rate: Enter annual percentage rate (APR) from your lender. Current rates range from 6% to 8%.
- Loan Term: Select mortgage duration. Common terms are 15 or 30 years.
- Property Tax: Enter annual property tax amount (typically 1-2% of home value).
- Home Insurance: Input annual homeowners insurance premium.
- Calculate: View monthly payment breakdown, total interest, and first-year amortization schedule.
Uses standard amortization formula: M = P × [r(1 + r)^n] / [(1 + r)^n - 1], where M = monthly payment, P = principal (home price - down payment), r = monthly interest rate, n = total payments. Same calculations used by banks and mortgage lenders.
Understanding Your Results
- Monthly Payment (P&I): Principal and interest payment only
- Monthly Property Tax: Annual property tax divided by 12 months
- Monthly Insurance: Annual homeowners insurance divided by 12 months
- Total Monthly Payment: Complete monthly payment including all components (PITI)
- Amortization Schedule: Shows how each payment is split between principal and interest over time
Frequently Asked Questions
What is included in my monthly mortgage payment?
Your monthly mortgage payment typically includes four components (PITI): Principal (loan amount), Interest (cost of borrowing), Property Taxes, and Insurance (homeowners insurance and possibly PMI if down payment is less than 20%). Some mortgages may also include HOA fees.
How much should my down payment be?
While 20% is traditionally recommended to avoid PMI (Private Mortgage Insurance), many loans allow down payments as low as 3-5%. FHA loans require 3.5%, conventional loans can be as low as 3%, and VA loans may require 0% down for eligible veterans. Larger down payments result in lower monthly payments and less interest paid over time.
What is an amortization schedule?
An amortization schedule shows how each monthly payment is divided between principal and interest over the life of the loan. Early payments are mostly interest, while later payments are mostly principal. This schedule helps you understand how your loan balance decreases over time and how much equity you're building each month.
Should I choose a 15-year or 30-year mortgage?
A 15-year mortgage has higher monthly payments but significantly lower total interest paid over the life of the loan. A 30-year mortgage offers lower monthly payments but costs more in total interest. Choose based on your budget, financial goals, and how long you plan to stay in the home. Use our calculator to compare different term lengths.
How does my credit score affect my mortgage rate?
Your credit score significantly impacts your interest rate. Higher scores (740+) typically qualify for the best rates, while scores below 620 may face higher rates or difficulty qualifying. Even a 0.5% difference in interest rate can save tens of thousands of dollars over a 30-year loan term.
What is PMI and how can I avoid it?
PMI (Private Mortgage Insurance) is required when your down payment is less than 20% of the home price. It protects the lender if you default on the loan and typically costs 0.5-1% of the loan amount annually. To avoid PMI, save for a 20% down payment, use a piggyback loan, or choose a VA loan if eligible.
Can I pay off my mortgage early?
Yes, most mortgages allow early payoff, but check for prepayment penalties. Making extra principal payments can significantly reduce total interest paid and shorten the loan term. Even small additional monthly payments can save thousands over the life of the loan. Consult your lender about prepayment options and terms.