Mortgage Calculator

Enter your home price, down payment, loan term, and interest rate — plus optional property tax, insurance, and HOA dues — and get your full monthly payment, total interest, and the true cost of the loan.

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How your mortgage payment is calculated

The principal & interest (P&I) part of your payment comes from the amortization formula: the lender finds the one fixed monthly amount that, paid every month, retires the loan exactly at the end of the term. Each payment first covers that month's interest on the remaining balance; whatever is left chips away at the principal. Property taxes and homeowners insurance don't go to the lender at all — they're usually collected into escrow and stacked on top of P&I, which is why your real payment is bigger than the number in the rate ads.

The formula

M = P × r(1 + r)n ÷ ((1 + r)n − 1)

M is the monthly principal & interest payment, P the loan amount (home price minus down payment), r the monthly interest rate (annual rate ÷ 12 ÷ 100), and n the number of monthly payments (years × 12). If the rate is 0%, the payment is simply P ÷ n.

Worked example

A $375,000 home with $75,000 down (20%) leaves a $300,000 loan. At 6.5% for 30 years: r = 0.065 ÷ 12 ≈ 0.005417 and n = 360, which gives a P&I payment of $1,896.20 per month.

Add $3,600/year property tax ($300/month) and $1,800/year insurance ($150/month), and the full monthly payment is $2,346.20. Over 30 years you'd pay roughly $382,600 in interest — more than the original loan itself.

Front-loaded interest and the 28% rule

In that example, the very first payment includes $1,625 of interest (0.5417% of $300,000) and only $271 of principal — about 86% of the check goes to interest. The split improves a little every month, but it takes most of a 30-year term before principal dominates. That's why extra payments made in the early years are so powerful: every extra dollar goes straight to the balance, killing decades of future interest on it.

For affordability, lenders lean on the 28% rule: your full housing payment (P&I plus taxes and insurance) should be at most 28% of your gross monthly income. The $2,346.20 payment above would call for roughly $8,380 of gross monthly income — about a $100,000 salary. Treat it as a ceiling, not a target; a payment well below it leaves room for everything else life invoices you for.

Frequently asked questions

How is a monthly mortgage payment calculated?

Lenders use the amortization formula M = P × r(1+r)^n ÷ ((1+r)^n − 1), where P is the loan amount, r is the monthly interest rate (annual rate ÷ 12), and n is the number of monthly payments. The result is a fixed payment that pays off the loan exactly at the end of the term. Taxes, insurance, and HOA dues are added on top of that.

What does PITI mean?

PITI stands for Principal, Interest, Taxes, and Insurance — the four pieces of a typical monthly housing payment. Principal and interest go to the lender; property taxes and homeowners insurance are usually collected into an escrow account and paid on your behalf. This calculator shows all four, plus HOA dues if you have them.

How much house can I afford?

A common rule of thumb is the 28% rule: your total housing payment (PITI) should stay at or below 28% of your gross monthly income. On a $100,000 salary, that's about $2,333 a month. It's a guideline, not a law — lenders also weigh your other debts, credit score, and down payment.

Why is most of my mortgage payment going to interest?

Interest each month is charged on the remaining balance, and early in the loan that balance is at its largest. On a $300,000 loan at 6.5%, the very first payment includes $1,625 of interest and only about $271 of principal. As the balance shrinks, the split gradually flips — but on a 30-year loan that takes roughly two decades.

Does this calculator include PMI?

No. Private mortgage insurance typically applies when your down payment is under 20% of the home price, and it usually runs about 0.3%–1.5% of the loan amount per year until you reach 20% equity. If PMI applies to you, estimate it separately and mentally add it to the monthly total shown here.

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