Mortgage Calculator

How to Use This Mortgage Calculator

1. Enter your home price — the purchase price of the home you're buying or refinancing.
2. Set your down payment — typically 3–20%+ of the home price. We show the dollar amount automatically.
3. Input your interest rate — use your quoted rate or check current rates on Bankrate or Zillow.
4. Select your loan term — 30, 20, or 15 years. Shorter terms mean higher payments but less interest.
5. Add taxes, HOA, and insurance for your full monthly payment picture.

How Mortgage Payments Work

A mortgage is an amortizing loan, meaning each payment covers both interest and a portion of the principal. In the early years, most of your payment goes toward interest. Over time, the balance decreases and more of each payment reduces your principal — this is called amortization.

Your lender calculates the exact payment amount needed so that equal monthly payments over the loan term will pay off the entire balance plus interest. This is why a 30-year mortgage has a much lower payment than a 15-year — you have twice as many payments to spread the cost.

The total cost of a mortgage includes not just the principal you borrowed, but all the interest accumulated over the loan life. On a $280,000 mortgage at 7% for 30 years, you'll pay roughly $391,000 in total — meaning $111,000 goes to interest alone.

The Mortgage Formula Explained

The monthly principal and interest payment is calculated using the standard amortization formula:

Where: M = monthly payment, P = principal loan amount, r = monthly interest rate (annual rate ÷ 12), n = total number of months.

Example: $280,000 loan, 7% rate, 30 years: r = 0.07/12 = 0.005833, n = 360. M = $280,000 × [0.005833 × (1.005833)^360] / [(1.005833)^360 - 1] = $1,863/month.

Real-World Mortgage Examples

Example 1: First-Time Homebuyer

Sarah buys a $350,000 home with 5% down ($17,500). Her $332,500 loan at 6.75% for 30 years costs $2,157/month in P&I, plus ~$350/month in taxes and insurance. Total: ~$2,507/month.

Example 2: Move-Up Buyer

The Johnsons sell their starter home and put 20% ($90,000) down on a $450,000 home. Their $360,000 loan at 7% for 30 years costs $2,395/month. No PMI since they put 20% down.

Example 3: Refinancing

Mike has a $250,000 balance at 4.5% with 25 years left. Refinancing to a 15-year at 6.5% raises his payment from $1,267 to $2,179 — but saves him $68,000 in interest and pays off 10 years sooner.

Tips to Minimize Your Mortgage Costs

• Put 20% down to eliminate PMI and reduce your loan amount significantly.
• Improve your credit score before applying — every 20-point increase can lower your rate by 0.1–0.25%.
• Consider a 15-year term if you can afford the higher payment — you'll save tens of thousands in interest.
• Make one extra payment per year — on a 30-year mortgage, this cuts 4–5 years off your loan and saves significant interest.
• Shop multiple lenders — rate differences of 0.5% can mean $50,000+ over the life of a loan.
• Lock your rate when rates are favorable — floating rates can increase before closing.
• Avoid extending the term when refinancing — if you have 22 years left, refinance to a 20-year, not a new 30-year.