Mortgage Calculator
Use our free mortgage calculator to estimate your monthly mortgage payment, total interest, loan cost, and amortization schedule based on your home price, down payment, interest rate, loan term, property taxes, insurance, and PMI.
Monthly Payment Composition
Interactive BreakdownAmortization Schedule
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How Mortgage Calculations Work
When financing a home in the United States, your monthly mortgage payment consists of two primary components: Principal (the money borrowed from the lender that reduces the loan balance) and Interest (the fee charged by the lender for borrowing the money). Most lenders also collect Property Taxes and Homeowners Insurance each month into an escrow account to pay municipal taxes and insurance premiums on your behalf. This combined total is commonly referred to as PITI.
Step-by-Step Mortgage Calculation Example
Suppose you purchase a single-family home for $400,000 with a 20% down payment ($80,000). Your loan principal is $320,000. You secure a 30-year fixed mortgage at an annual interest rate of 6.50%.
- Monthly Interest Rate (r): 0.065 ÷ 12 = 0.0054167
- Total Months (n): 30 × 12 = 360 payments
- Monthly Principal & Interest: $320,000 × [0.0054167(1 + 0.0054167)360] ÷ [(1 + 0.0054167)360 − 1] = $2,022.62
- Monthly Property Tax ($4,800/yr): $400.00
- Monthly Insurance ($1,400/yr): $116.67
- Total Estimated Monthly Payment (PITI): $2,022.62 + $400.00 + $116.67 = $2,539.29
- Cumulative Interest Paid: ($2,022.62 × 360) − $320,000 = $408,143 over 30 years.
Key Factors Affecting Your Mortgage Payment
Several variables influence your true borrowing costs under US lending guidelines:
- Down Payment Size & PMI: Putting down less than 20% on a conventional loan triggers Private Mortgage Insurance (PMI), which typically adds 0.5% to 1.5% of the loan amount annually until your equity reaches 20% to 22%.
- Loan Term (15 vs 30 Years): While a 15-year mortgage requires a higher monthly payment, it significantly reduces the total interest paid and generally carries a lower interest rate from lenders.
- Credit Score (FICO): Higher credit scores (740+) unlock the most competitive interest rates, whereas lower scores can increase monthly rates by 0.5% to 1.5%, compounding into tens of thousands in extra interest.
- Escrow Fluctuations: Local municipal tax assessments and insurance premiums adjust periodically, meaning your monthly escrow payment can change even with a fixed-rate mortgage.