How it works
A mortgage payment is the amount that clears the loan exactly at the end of the term: M = P × i × (1+i)n ÷ ((1+i)n − 1), with i the monthly interest rate and n the number of monthly payments.
- Enter the price and your deposit — the loan is what is left.
- Add the interest rate and the term, usually 15, 20 or 30 years.
- Add property tax, insurance and any association fee to see the real monthly cost, not just principal and interest.
Early payments are mostly interest: on a 30-year loan at 7%, the first payment is about four-fifths interest. Anything extra you pay goes straight against the principal, which is why one additional payment a year can take years off the term.
Examples
Worked examples (principal and interest only):
- $300,000 at 7% over 30 years: $1,996 a month, $418,527 of interest over the life of the loan.
- The same loan over 15 years: $2,696 a month, but only $185,367 of interest — less than half.
- One point lower, 6% over 30 years: $1,799 a month, saving $2,367 a year.
Related: Grade Calculator, ROI Calculator, SIP Calculator.
Mortgage Calculator: frequently asked questions
- How is a mortgage payment calculated?
- M = P × r(1+r)^n ÷ ((1+r)^n − 1), with r = annual rate ÷ 12 and n = years × 12. Property tax, homeowners insurance, PMI and HOA fees are added on top.
- How much of my payment goes to interest?
- Early payments are mostly interest; the share going to principal grows every month. The amortization table above shows the split for each year.
- How does a bigger down payment help?
- It lowers the loan amount (and payment), cuts total interest, and at 20% or more usually removes private mortgage insurance (PMI).
- Should I choose a 15- or 30-year mortgage?
- A 15-year loan has higher monthly payments but a lower rate and far less total interest; a 30-year loan keeps payments lower.