How to use this mortgage calculator
- Enter the home price — the purchase price you expect to pay.
- Add your down payment in dollars. The calculator shows it as a percentage of the price.
- Set the interest rate and loan term. Use a quote from a lender if you have one; 30-year and 15-year fixed loans are the most common.
- Include taxes, insurance and HOA fees for a realistic total. Your county website or real-estate listing usually shows the annual property tax.
- Review the results: your total monthly payment, how it splits between principal, interest and escrow costs, and a year-by-year amortization schedule.
The mortgage payment formula
The principal-and-interest part of a fixed-rate mortgage is calculated with the standard amortization formula:
- M = monthly principal and interest payment
- P = loan amount (home price minus down payment)
- r = monthly interest rate (annual rate ÷ 12 ÷ 100)
- n = number of monthly payments (years × 12)
Property tax, homeowners insurance, PMI and HOA dues are then added on top. Together, principal, interest, taxes and insurance are often called PITI.
Example: a $400,000 home
Say you buy a $400,000 home with 20% down ($80,000), leaving a $320,000 loan at 6.5% for 30 years. The monthly rate is 0.065 ÷ 12 ≈ 0.005417 and there are 360 payments. Plugging those into the formula gives a principal-and-interest payment of about $2,022.62. Over 30 years you would pay roughly $408,142 in interest — more than the original loan.
At the same 6.5% rate, a 15-year term raises the payment to about $2,787.54 but cuts total interest to roughly $181,758, saving over $226,000. In practice 15-year loans usually carry lower rates too, so the savings are often larger.
What affects your monthly mortgage payment?
- Interest rate: even a 0.5% difference changes the payment on a $320,000 loan by around $100 a month.
- Loan term: longer terms lower the monthly payment but increase total interest.
- Down payment: a bigger down payment shrinks the loan and, at 20% or more, usually removes private mortgage insurance (PMI).
- Property tax and insurance: these vary widely by location and can add hundreds of dollars a month.
- HOA fees: condos and planned communities often charge monthly association dues.
How much house can I afford?
A common guideline is the 28/36 rule: keep your total housing payment under 28% of gross monthly income and all debt payments under 36%. For example, with a gross income of $9,000 a month, a housing payment up to about $2,520 fits the 28% guideline. Lenders look at your full financial picture, so treat this as a starting point.
Ways to lower your mortgage payment
- Improve your credit score before applying to qualify for a better rate.
- Save for a 20% down payment to avoid PMI.
- Compare offers from several lenders — rates and fees vary.
- Consider buying discount points if you plan to stay in the home long-term.
- Appeal your property tax assessment or shop around for homeowners insurance.
Frequently asked questions
What is included in a monthly mortgage payment?
A typical mortgage payment includes principal and interest, plus property taxes and homeowners insurance (often collected in an escrow account). It may also include private mortgage insurance (PMI) if your down payment is under 20%, and HOA dues if they apply.
How is a mortgage payment calculated?
The principal-and-interest portion uses 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 and n is the number of payments. Taxes, insurance, PMI and HOA fees are then added.
What is PMI and when do I have to pay it?
Private mortgage insurance protects the lender on conventional loans when your down payment is less than 20% of the home price. It typically costs about 0.3% to 1.5% of the loan amount per year and can usually be removed once you reach 20% equity.
Is a 15-year or 30-year mortgage better?
A 15-year mortgage has higher monthly payments but a lower rate and far less total interest. A 30-year mortgage has lower payments and more flexibility. The better choice depends on your budget, goals and how long you plan to stay in the home.
Does this calculator work for refinancing?
Yes. Enter your current home value as the price and your equity as the down payment (or set the down payment so the loan equals your new loan balance), then use the new rate and term to estimate the refinanced payment.
Results are estimates for educational purposes and are not financial advice. Actual loan terms, rates, taxes and fees vary by lender and location — confirm figures with a qualified professional before making decisions.
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