How this mortgage calculator works
Your monthly mortgage payment has two core parts: principal (the amount that pays down your loan) and interest (the lender's charge). Together they're called P&I, and they're fixed for the life of a fixed-rate loan. We calculate them with the standard 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 monthly payments.
On top of P&I, most homeowners also pay property tax, homeowners insurance, and sometimes HOA fees. Lenders usually bundle taxes and insurance into an escrow account, so this calculator adds them to give you a realistic total monthly housing cost — the number that actually leaves your bank account.
Tips to lower your mortgage payment
- Increase your down payment. Putting 20% down avoids private mortgage insurance (PMI) and shrinks your loan.
- Shop multiple lenders. Even a 0.25% rate difference can save thousands over 30 years.
- Consider a shorter term. A 15-year loan has higher monthly payments but dramatically less total interest.
- Improve your credit score before applying to qualify for the best advertised rates.
Example
On a $400,000 home with 20% down ($80,000) at 6.5% over 30 years, the loan is $320,000. Principal and interest come to roughly $2,022 per month, and over the full term you'd pay about $408,000 in interest alone — which is exactly why comparing rates matters.
Mortgage calculator FAQ
Does this include PMI?
Not automatically. If your down payment is under 20%, add roughly 0.5%–1% of the loan amount per year as PMI until you reach 20% equity.
What's the difference between interest rate and APR?
The interest rate is the cost of borrowing the principal. APR also includes certain fees, so it's usually slightly higher and is better for comparing loans.
Should I choose 15 or 30 years?
A 30-year loan keeps monthly payments low; a 15-year loan costs more monthly but saves a large amount of total interest. Use the term selector above to compare both.