Mortgage Calculator
Work out your full monthly mortgage payment — principal, interest, tax, insurance and PMI — with a complete amortisation schedule and payoff date.
How to use this calculator
- 1Enter the purchase price and how much cash you are putting down, as either a percentage or a dollar amount.
- 2Add the lender’s quoted annual rate, the term in years, and when the loan starts.
- 3Leave the ongoing costs on to see the true monthly outlay, and add an annual increase for any that you expect to rise.
- 4Add an extra monthly, yearly or one-time payment — or switch on biweekly — to see how much time and interest it saves.
- 5Expecting more than one windfall — a bonus, an inheritance, a tax refund? List each as "amount @ payment number" in "Further one-time payments", one per line.
- 6Open the amortisation schedule to see exactly how the balance falls, month by month, with real calendar dates.
How the calculation works
M = P × i / (1 − (1 + i)⁻ⁿ)- M
- Monthly principal-and-interest payment
- P
- Principal — the amount borrowed (home price − down payment)
- i
- Monthly interest rate — the annual rate divided by 12
- n
- Total number of monthly payments (years × 12)
This is the standard annuity formula. It produces a level payment where the split between interest and principal shifts over time: early payments are mostly interest, later ones mostly principal.
Property tax, insurance, PMI, HOA and other fees are not part of the annuity. They are added on top, which is why an escrowed payment is larger than the P&I figure lenders quote in adverts.
Each row of the schedule is rounded to the cent as it is calculated, and the final payment is adjusted so the balance lands on exactly zero — the same way a loan servicer handles it.
Worked example
A $400,000 home with 20% down at 6.5%
- 1.The loan is $400,000 − $80,000 = $320,000.
- 2.The monthly rate is 6.5% ÷ 12 = 0.541666…%, and there are 30 × 12 = 360 payments.
- 3.Applying the annuity formula: 320,000 × 0.00541666 ÷ (1 − 1.00541666⁻³⁶⁰) = $2,022.62 of principal and interest.
- 4.Property tax adds $4,800 ÷ 12 = $400 and insurance adds $1,800 ÷ 12 = $150.
- 5.The 20% deposit means no PMI, so the total is $2,022.62 + $400 + $150 = $2,572.62.
Result: $2,572.62 per month, of which $2,022.62 is principal and interest
What a mortgage actually is
A mortgage is a loan used to buy property, secured by the property itself. That security is what makes the "mortgage" different from an ordinary personal loan: if the borrower stops paying, the lender can foreclose and sell the home to recover what it is owed. In exchange for taking that risk off the seller, the lender pays out the purchase price up front and the buyer repays it, with interest, over a term that in the United States is most commonly 30 years, followed by 15.
Until the final payment clears, the lender holds a legal claim — a lien — against the property, even though the buyer lives in it, insures it and is responsible for its upkeep from day one. That is why refinancing, selling early or defaulting all involve the lender directly: the debt and the deed are tied together for as long as the loan exists.
The moving parts of a mortgage
Every mortgage is built from the same handful of variables, and changing any one of them reshapes the whole loan.
- Principal — the amount actually borrowed — the purchase price minus the down payment. This is what interest is charged on, so anything that shrinks it (a bigger deposit, an extra payment) shrinks the interest bill too.
- Down payment — cash paid up front, expressed as a percentage of the price. Lenders treat 20% as a rough dividing line: below it, most U.S. lenders require mortgage insurance because a smaller cushion means more risk if property values fall.
- Loan term — how many years the debt is spread over. A longer term lowers the monthly payment but stretches out interest charges — a 30-year loan typically costs more than double the total interest of the same balance over 15 years.
- Interest rate — usually quoted as an Annual Percentage Rate (APR) and charged monthly at one-twelfth of that rate. Fixed-rate loans lock this in for the whole term; adjustable-rate loans (ARMs) start lower but can rise or fall after an initial period, shifting some of the interest-rate risk from the lender to the borrower.
What you are really paying every month
Lenders often advertise a rate using only principal and interest, but the amount that actually leaves a homeowner’s account each month is usually higher, because a lender collects several other costs alongside the loan payment and holds them in an escrow account until they are due. Industry shorthand for the full bundle is PITI — principal, interest, taxes, insurance.
- Property tax — billed by the local government and used to fund schools, roads and other services. Rates vary enormously by location — U.S. homeowners pay roughly 1% of a property’s value each year on average, but the real figure can be several times that depending on the county.
- Homeowners insurance — covers the structure against fire, storm and similar damage, and is required by virtually every mortgage lender to protect their collateral.
- Private mortgage insurance (PMI) — protects the lender, not the borrower, and typically applies whenever the down payment is below 20%. It is cancellable once the loan balance falls to 80% of the original property value.
- HOA fees — charged by a homeowners association in many condos, townhomes and planned communities, covering shared upkeep like landscaping, amenities and building insurance.
- Maintenance and upkeep — not collected by the lender, but real all the same — a commonly used rule of thumb budgets around 1% of a home’s value per year for repairs and general wear.
Paying a mortgage off ahead of schedule
Because interest is charged on whatever balance remains, any payment above the scheduled amount goes straight toward principal and stops accruing interest for the rest of the loan. Three approaches are common:
- 1Extra payments — adding a fixed amount to the regular payment, monthly, yearly or as one-off lump sums. Even a modest, consistent overpayment can shave years off a 30-year loan.
- 2Biweekly payments — paying half the monthly amount every two weeks instead of the full amount once a month. Because a year has 52 weeks, this quietly adds up to 13 full monthly payments a year instead of 12.
- 3Refinancing to a shorter term — taking out a new loan to replace the old one, usually at a lower rate and a shorter term. This raises the monthly payment but can cut total interest substantially — though it comes with its own closing costs.
What early repayment costs you
Paying down a mortgage faster is not automatically the right move for every borrower. A few real trade-offs are worth weighing before committing extra cash to it.
- Prepayment penalties — some loan agreements charge a fee for paying off the balance faster than scheduled, though these have become far less common on standard U.S. mortgages since the 2010 Dodd-Frank reforms restricted them. Check the loan contract, not assumptions, before overpaying heavily.
- Opportunity cost — a mortgage is often the cheapest debt a household will ever hold. Directing extra cash toward higher-returning investments instead can leave a borrower better off overall, even while carrying the loan longer.
- Reduced liquidity — money paid into a home is not easily accessible again without selling or borrowing against it, unlike cash kept in savings or investments.
- A smaller interest deduction — in the U.S., mortgage interest can be tax-deductible for borrowers who itemize. Paying down the balance faster shrinks that deduction along with the interest bill.
How the modern mortgage came to be
Before the 1930s, a typical American home loan looked nothing like today’s. Terms ran three to five years, down payments of around half the purchase price were common, and the loan ended in a large "balloon" payment rather than being fully paid off through regular installments. That structure left homeownership out of reach for most families and turned into a wave of defaults during the Great Depression, as short-term loans came due at the worst possible moment to refinance them.
In response, the U.S. government created the Federal Housing Administration in 1934 and chartered the Federal National Mortgage Association — Fannie Mae — in 1938, to insure lenders against default and buy mortgages off their books. That federal backing is what made the long-term, fully amortizing, fixed-rate loan this calculator models into the standard product, with far smaller down payments and a predictable, level payment for the life of the loan. Veterans’ home loans, introduced after the Second World War, extended similar access to millions of returning servicemembers and helped fuel decades of suburban growth.
The system was tested again in 2008, when a wave of defaults tied to loosened lending standards forced Fannie Mae and its counterpart Freddie Mac into federal conservatorship and triggered a broad tightening of mortgage underwriting across the industry. Despite that shock, the 30-year fixed-rate mortgage — a product that is unusually long and unusually borrower-friendly by international standards — has remained the default way Americans finance a home purchase.
What this assumes, and where it stops
Assumptions
- The interest rate is fixed for the entire term. Adjustable and tracker mortgages will diverge from this once the rate moves.
- Payments are made monthly, on schedule, starting one month after the loan begins.
- PMI is charged on the original loan amount and stops when the scheduled balance falls below 80% of the purchase price.
- Interest accrues on the outstanding balance each month, with no daily-interest or offset features.
- Biweekly payments are modelled as their standard monthly-equivalent, not a literal day-by-day biweekly schedule.
Limitations
- Closing costs, lender fees, points and stamp duty are not included — they are paid up front, not monthly.
- It does not model rate changes, payment holidays, recasts, or interest-only periods.
- PMI removal in practice may require a formal request or an appraisal, and rules differ by lender and country.
- Tax treatment of mortgage interest varies by jurisdiction and is not modelled at all.
- One-time payments landing on the same payment number are combined, so entering the same period twice adds rather than overwrites.
Common questions
Why is my lender’s quoted payment lower than this?
Adverts almost always quote principal and interest only. Once property tax, home insurance and any mortgage insurance are collected into escrow, the amount actually leaving your account is typically 20–30% higher. Switch off "include tax, insurance and other costs" to compare like for like.
How much difference does one extra payment a month make?
More than most people expect, because every extra dollar goes straight against the principal and stops accruing interest for the rest of the term. On a 30-year loan at 6.5%, an extra 10% on the payment typically clears the mortgage around four to five years early. Enter a figure in "extra payment" to see your own numbers.
Does biweekly really save that much?
Yes, and the mechanism is simple: 26 half-payments a year works out to 13 full monthly payments instead of 12 — one extra payment a year, spread out so it barely feels different. Over a 30-year loan that typically saves several years and a meaningful chunk of interest, which is why it is one of the highest-value, lowest-effort changes a borrower can make.
What is PMI and when does it stop?
Private mortgage insurance protects the lender, not you, and is usually required when you borrow more than 80% of the property value. It is charged as a percentage of the loan each year. This calculator drops it automatically once the scheduled balance falls below 80% of the purchase price, which is the point most US lenders use.
Is a 15-year mortgage really cheaper?
The monthly payment is substantially higher, but the total interest is dramatically lower — often less than half — because you are borrowing the money for half as long, usually at a better rate. Run the same loan at 30 and 15 years and compare the "total interest" figure.
Can I model more than one lump-sum payment?
Yes. The single "one-time extra payment" field covers one lump sum; for several — a bonus this year, a tax refund next year — list each as "amount @ payment number" in "Further one-time payments", one per line. Payments landing on the same month are added together automatically.
Sources
- Understanding mortgage loan options — US Consumer Financial Protection Bureau
- Private mortgage insurance: when it can be cancelled — US Consumer Financial Protection Bureau
Formula and content last reviewed on .
Results are estimates for information only, not professional advice.
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