Mortgage Calculator
Calculate your monthly mortgage payments, total interest, and see how much home you can afford with our comprehensive mortgage calculator.
Input Values
Results
Enter values and calculate
How to Use
- 1Enter the home price or purchase amount
- 2Input your down payment amount
- 3Select your loan term in years (typically 15, 20, or 30 years)
- 4Enter the annual interest rate
- 5Click Calculate to see your monthly payment and total costs
Formula
M = P[r(1+r)^n] / [(1+r)^n - 1] Where: M = Monthly Payment P = Principal Loan Amount r = Monthly Interest Rate n = Number of Payments
Common Use Cases
Understanding Your Mortgage
A mortgage is likely the biggest financial commitment you'll ever make. Understanding how it works is crucial to making smart financial decisions. Our Mortgage Calculator is designed to give you a clear picture of your potential monthly payments and total interest costs.
Whether you're a first-time homebuyer or looking to refinance, knowing your numbers helps you budget effectively and negotiate better terms with lenders.
Components of a Mortgage Payment (PITI)
Your monthly mortgage payment is typically made up of four main components, often referred to by the acronym PITI:
- Principal: The portion of your payment that goes toward paying down the loan balance. In the early years of a mortgage, this amount is small, but it grows over time.
- Interest: The cost of borrowing money. This is paid to the lender. Initially, a large chunk of your payment goes toward interest.
- Taxes: Property taxes assessed by your local government. These are often collected by the lender and held in an escrow account to be paid annually.
- Insurance: Homeowners insurance protects your property against damage. Like taxes, this is often included in your monthly payment and paid from escrow.
Note: This calculator focuses on Principal and Interest. Don't forget to budget extra for Taxes and Insurance, which can add hundreds of dollars to your monthly bill.
How Interest Rates Impact Your Payment
Even a small difference in your interest rate can have a massive impact on your monthly payment and the total cost of your loan.
For example, on a $300,000 loan:
- At 6.0% interest:$1,799 / month
- At 7.0% interest:$1,996 / month
That 1% difference costs you nearly $200 more per month and over $70,000 more in total interest over 30 years!
Tips for Lowering Your Mortgage Payment
1. Increase Your Down Payment
Putting more money down reduces the principal loan amount, which lowers your monthly payment and total interest. If you put down 20% or more, you also avoid Private Mortgage Insurance (PMI).
2. Improve Your Credit Score
Lenders reserve their best rates for borrowers with high credit scores (typically 760+). paying down debt and correcting errors on your credit report can save you thousands.
3. Consider a Shorter Term
While a 15-year mortgage has higher monthly payments than a 30-year one, the interest rate is usually lower, and you'll pay significantly less interest overall.
4. Shop Around
Don't settle for the first offer. Get quotes from multiple lenders—banks, credit unions, and online lenders—to find the best rate and lowest closing costs.
Frequently Asked Questions
What is a good debt-to-income (DTI) ratio for a mortgage?▼
Most lenders prefer a DTI ratio of 36% or lower, with no more than 28% of that debt going towards your mortgage. However, some loan programs allow DTIs as high as 43% or even 50%.
Should I choose a 15-year or 30-year mortgage?▼
Choose a 30-year term if you want lower monthly payments to maximize cash flow. Choose a 15-year term if you can afford the higher payments and want to save money on interest and pay off your home faster.
What is PMI and how do I avoid it?▼
Private Mortgage Insurance (PMI) protects the lender if you default. It's typically required if your down payment is less than 20%. You can avoid it by putting 20% down or by refinancing once you have 20% equity in your home.