Mortgage Calculator

When a lender quotes a "monthly payment," it usually means principal and interest (P&I) only. Your real housing cost — the number your budget cares about — is PITI: Principal, Interest, Taxes, and Insurance, plus PMI and HOA dues where they apply.

For our example loan ($320,000 at 6.5% for 30 years), P&I is $2,022.62. Property tax is typically escrowed: the national average effective rate is roughly 1.1% of home value per year, but it ranges from under 0.5% to over 2% depending on the state and county — on a $400,000 home that means anywhere from about $167 to $667 per month, with ~$367/month at the national average. Homeowners insurance commonly runs in the range of $1,500–$3,000+ per year ($125–$250+ per month), varying with location, replacement cost, and coverage. If your down payment is under 20%, add PMI (see the dedicated section below — on this loan, roughly $133–$267 per month).

That is why two houses with identical P&I can carry very different true monthly costs — and why this calculator lets you layer taxes, insurance, PMI, and HOA into the estimate instead of stopping at P&I. To work backwards from a monthly budget to a home price, use the house affordability calculator.

Every fully amortizing fixed-rate mortgage payment comes from one equation: M = P × r(1+r)ⁿ / ((1+r)ⁿ − 1), where P is the loan principal, r is the monthly interest rate (annual rate ÷ 12), and n is the number of monthly payments. Walking through it with the example loan:

1. Convert the annual rate to monthly: r = 6.5% ÷ 12 = 0.065 ÷ 12 = 0.0054167 (about 0.5417% per month).
2. Count the payments: n = 30 years × 12 = 360.
3. Compute the growth factor: (1 + 0.0054167)³⁶⁰ ≈ 6.9918. Over 30 years, compounding multiplies by nearly seven.
4. Build the fraction: numerator r(1+r)ⁿ = 0.0054167 × 6.9918 ≈ 0.037872; denominator (1+r)ⁿ − 1 = 5.9918. The ratio is ≈ 0.006321.
5. Multiply by the principal: M = $320,000 × 0.006321 ≈ $2,022.62 per month.

Notice what the formula reveals: the payment depends only on principal, rate, and term — not on income or home value. Doubling the loan doubles the payment; a small rate change moves the (1+r)ⁿ factor a lot because n is large. For comparing loans with different fee structures on a rate basis, see the APR calculator.

Each month, interest is charged on the remaining balance at the monthly rate; whatever is left of your payment reduces principal. Because the balance starts at its maximum, early payments are overwhelmingly interest:

This front-loading is why the first years of a mortgage build equity slowly, and why extra payments early in the loan save dramatically more than the same dollars later — they knock out principal while it still has decades of interest attached. It also explains refinancing math: someone who refinances into a new 30-year loan late in life restarts that interest-heavy curve. You can inspect every row of your own schedule in the amortization table above, or in the dedicated amortization calculator.

A 15-year loan charges a higher payment but a typically lower rate — and far less total interest. Comparing the same $320,000 borrowed:

The catch is cash-flow risk: the 15-year payment is $678–$765 per month higher, and that higher payment is contractual. The 30-year alternative preserves flexibility — you can mimic a 15-year payoff voluntarily by paying about $765/month extra (the calculator above shows this exactly), which produces the identical $181,758 interest bill at the same rate, while keeping the legal right to drop back to $2,022.62 if you hit a rough patch. The reverse is not true: a 15-year borrower cannot shrink a $2,787 payment without refinancing. The disciplined-saver answer is often "30-year term + automatic extra principal"; the peace-of-mind answer is the 15-year. Both are defensible — the mistake is paying 15-year money for 30-year discipline you never actually apply.

Because extra principal payments eliminate every future month of interest that principal would have generated, their impact compounds. On the example loan:

Timing matters as much as size. Adding $100/month from day one saves $61,698; starting the same $100/month in year 6 saves $38,711; starting in year 11 saves $22,332. A $10,000 lump sum applied at the end of year 1 saves $50,537 and retires the loan 29 months early; the same $10,000 in year 5 saves $37,546; in year 10, $24,976. Same dollars, shrinking leverage — the earlier, the more powerful.

Biweekly programs work by the same mechanism: paying half the payment ($1,011.31) every two weeks produces 26 half-payments a year — 13 full payments instead of 12. That is mathematically equivalent to adding about $168.55/month, and on the example loan it saves roughly $89,583 and cuts around 5.7 years off the term. Two cautions: never pay a third-party company a setup fee for something you can do yourself with a free recurring extra payment, and check that your servicer applies extras to principal rather than to the next scheduled payment. Model your own numbers — monthly, annual, one-time, or biweekly — in the Extra Payments panel above.

Private Mortgage Insurance protects the lender — not you — when your down payment is under 20%, and it is priced as an annual percentage of the loan balance, typically 0.5% to 1.0% per year depending on credit score, LTV, and loan type. On a $320,000 loan that is a range of roughly $133–$267 per month ($1,600–$3,200 per year) — a cost that buys you nothing but the ability to borrow at a higher LTV.

PMI is not forever. Under federal rules, you can request removal in writing once your scheduled balance reaches 80% of the home's original value, and the servicer must automatically terminate it at 78% (for loans current on payments). On a $360,000 loan against a $400,000 purchase (90% LTV) at 6.5%, scheduled amortization alone reaches the 80% mark around year 7.9; adding $100/month of principal pulls that in to about year 6.4. Appreciation can accelerate it too: with enough market gain (or improvements), a new appraisal may support removal even earlier, though lenders often require a seasoning period of about two years for appreciation-based removal.

The alternative to paying PMI is a larger down payment — but compare honestly: waiting years to save 20% while prices and rates move can cost more than the PMI would have, and low-down-payment programs such as the FHA loan exist precisely for that trade-off (note FHA's mortgage insurance has its own rules).

Lenders underwrite against two ratios. The front-end ratio says total housing payment (PITI + HOA) should stay at or below about 28% of gross monthly income; the back-end ratio says all monthly debt payments — housing plus car loans, student loans, credit card minimums — should stay at or below about 36%, with many loans allowing up to 43% and some up to 50% with compensating factors.

Concrete example: for the $320,000 loan on a $400,000 home, PITI comes to roughly $2,514–$2,639/month (P&I $2,023, tax ~$367 at the ~1.1% national average, insurance $125–$250). At a strict 28% front-end, that implies gross income of about $108,000–$113,000 per year. With $500/month of other debt, a 36% back-end cap implies about $104,000 per year — tighter than the front-end, which is typical: existing debt usually binds first. These are guideline boundaries, not laws; lenders also weigh credit score, reserves, and employment. Run your own numbers in both directions (payment→income here, income→price in the affordability calculator).

Small rate differences are amplified by the 360-payment term. Monthly P&I and lifetime interest on $320,000 over 30 years:

Dropping from 6.5% to 6.0% saves $104.07/month and $37,460 in lifetime interest; a full point to 5.5% saves $205.69/month and $74,049. That is why collecting several loan estimates within a short window (credit bureaus count rate-shopping inquiries for the same loan type as one event, typically within a 14–45 day window) is one of the highest-paying hours you will ever spend.

The same math governs refinancing. At 6.5% → 5.5%, the payment drops $205.69/month. If closing costs run $4,000–$6,000, the break-even is 19–29 months; refinance only if you expect to hold the loan past that point — and remember a "no-cost" refinance usually rolls the costs into the rate or balance. Test scenarios in the refinance calculator.

Cash-to-close has two parts. The down payment sets your LTV — and your PMI bill. On a $400,000 home at 6.5% for 30 years:

Closing costs are the second part: origination and underwriting fees, appraisal, title search and insurance, recording fees, prepaid interest, and the initial escrow deposit for taxes and insurance. They typically run about 2–5% of the loan amount — roughly $6,400–$16,000 on a $320,000 loan — with location, loan type, and negotiable lender fees driving the spread. Some costs are fixed (appraisal, recording) while others scale with the loan (origination points), and sellers can sometimes be negotiated to contribute. Between the down payment and these costs, plan your total cash need carefully; a down payment savings plan or a quick rent vs buy comparison can tell you whether waiting or buying now is the better move.

The calculator works for UK mortgages — pick £ (GBP) in the currency selector. Three conventions matter when you compare numbers with a UK lender's quote:

Rates are quoted as annual effective (AER-style). The monthly rate is (1 + rate)^(1/12) − 1, not rate ÷ 12. On a £250,000 loan at 4.75% for 25 years, that gives a payment of £1,410.90/month and about £173,269 of total interest — about £14/month less than the naive rate÷12 math that most US-focused tools use.

Terms are short, the loan is not. UK mortgages are typically structured as a 20–35 year amortisation with a 2, 3, 5, or 10-year fixed period inside it. When the fix ends you remortgage onto a new deal or roll onto the lender's SVR — so model the payment at several rates, and use the extra payment calculator for overpayments (most UK fixes allow 10–20% of the balance per year penalty-free). UK specific costs the calculator asks you to enter yourself: the product/arrangement fee (typically £0–£1,500, often added to the loan), stamp duty (SDLT — 0% on the first £250,000 for most buyers, with surcharges for second homes), and buildings insurance. There is no PMI equivalent; deposits below 10% simply price higher through loan-to-value bands (95%, 90%, 85%, 75%…).

Canadian fixed mortgage rates are quoted with semi-annual compounding by law, even though you pay monthly. The equivalent monthly rate is (1 + rate/2)^(1/6) − 1, which is slightly lower than rate ÷ 12. Choose CA$ (CAD) in the currency selector, then apply the rate as quoted by your lender — on a CA$500,000 loan at 5.5% for 25 years, the payment is CA$3,051.96/month (about CA$18/month less than the naive US formula) with roughly CA$415,587 of total interest over the term.

The stress test. Since 2021, uninsured borrowers must qualify at the greater of their contract rate + 2% or 5.25%. At a 5.5% contract rate that means qualifying at 7.5% — a payment of CA$3,657.78/month on the example loan, about CA$606/month more. Your approval is bounded by that number, not the payment you will actually make.

Terms vs amortisation. Like the UK, a Canadian mortgage has a 25-year (typical, up to 30) amortisation containing a shorter term (commonly 5 years fixed or variable). At renewal you re-qualify at then-current rates — no sale or refinance needed, just a new term. Insured mortgages (down payment under 20%) require CMHC insurance of up to 4% of the loan, usually added to the balance; enter it as part of the loan amount to see its interest cost. Prepayment privileges are typically 15–25% of the balance per year plus payment increases, with penalties beyond that.

Transparency about the math behind the tool: the calculator uses the standard fixed-rate amortization formula above, with interest assessed monthly on the remaining balance. PMI is estimated from the loan-to-value ratio and stops automatically when scheduled (or accelerated) equity reaches 20% of the original home price, matching the request-at-80% rule; actual lender policies and appraisal-based removal may differ. Property tax and insurance are whatever you enter — the defaults are placeholders, so replace them with your county's effective tax rate and a real insurance quote for a meaningful total. Extra payments are applied to principal in the month you schedule them; one-time payments apply on the specified month number. The schedule assumes payments are made on time and no escrow shortages, rate changes, recasts, or refinances occur. Results are estimates for planning, not a loan offer — your lender's figures govern.