Mortgage Calculator - Estimate Your Home Loan Payment
Calculate your monthly mortgage payment including principal, interest, taxes, insurance, PMI, and HOA fees
Free mortgage payment calculator for home buyers, refinancing, and loan comparison
Mortgage Details
Loan amount: $0
Your Mortgage Payment
Total Monthly Payment
$0.00
Monthly Breakdown
Principal & Interest$0.00
Loan Summary
Home Price$350,000
Down Payment$70,000
Loan Amount$0
Total Interest Paid$0
Affordability Guideline
Lenders commonly use the 28% rule, assessing whether monthly housing payments are within 28% of gross monthly income.
Educational Information Only
This calculator and all content on this page are provided for educational and informational purposes only. The information describes how mortgage calculations work, what factors affect payments, and common scenarios in home financing. This is not financial advice, and no content on this page constitutes a recommendation or suggestion about what actions you should take. Mortgage decisions involve complex personal financial considerations. For personalized guidance regarding your specific financial situation, consult with qualified financial advisors, mortgage professionals, or legal counsel.
What is a Mortgage Calculator?
A mortgage calculator is a financial tool that helps prospective homebuyers estimate their monthly home loan payments. This home loan calculator considers multiple factors including the purchase price, down payment amount, interest rate, loan term, property taxes, homeowners insurance, private mortgage insurance (PMI), and homeowners association (HOA) fees to provide an accurate monthly payment estimate.
Our free mortgage payment calculator uses the standard amortization formula to calculate your principal and interest payments, then adds additional housing costs to give you a complete picture of your monthly mortgage obligation. Whether you're a first-time homebuyer, exploring refinancing options, or comparing different loan scenarios, this home affordability calculator provides detailed payment estimates and loan comparisons.
Understanding Your Monthly Mortgage Payment (PITI)
Your total monthly mortgage payment typically consists of four main components, commonly referred to as PITI:
Principal
The amount you borrowed for the home loan. With each monthly payment, a portion goes toward reducing the principal balance of your mortgage.
Interest
The cost of borrowing money from the lender, calculated as a percentage (APR) of the loan amount. Interest rates can be fixed or adjustable depending on your mortgage type.
Taxes
Annual property taxes assessed by your local government. These are typically collected monthly through an escrow account and paid to the tax authority by your lender.
Insurance
Homeowners insurance protects your property from damage. If you have less than 20% equity, you'll also pay PMI (Private Mortgage Insurance) to protect the lender.
Types of Mortgage Loans
Different mortgage types have distinct characteristics and are used in various home financing scenarios:
Fixed-Rate Mortgages
A fixed-rate mortgage maintains the same interest rate throughout the entire loan term. This provides payment stability and predictability, making budgeting easier. The most common terms are 30-year mortgages and 15-year mortgages.
30-Year Fixed Mortgage: Lower monthly payments, more total interest paid
20-Year Fixed Mortgage: Balance between payment size and interest savings
An adjustable-rate mortgage (ARM) starts with a fixed interest rate for an initial period, then adjusts periodically based on market conditions. Common types include 5/1 ARM (fixed for 5 years, then adjusts annually) and 7/1 ARM.
Lower initial interest rates compared to fixed-rate mortgages
Payment uncertainty after the initial fixed period
Commonly used by buyers planning to move or refinance before rate adjustment
Government-Backed Mortgages
Government-backed loans offer special benefits and lower down payment requirements:
FHA Loans: Down payment as low as 3.5%, more flexible credit requirements
VA Loans: Zero down payment for eligible veterans and service members
USDA Loans: Zero down payment for rural property purchases
How to Use the Mortgage Payment Calculator
Follow these steps to calculate your estimated monthly mortgage payment:
Enter the Home Price: Input the purchase price of the property you're considering. This is the total cost of the home before your down payment.
Set Your Down Payment: Enter your down payment as a percentage or dollar amount. A 20% down payment typically avoids PMI requirements and may result in more favorable interest rates. First-time homebuyers may have access to programs with down payment requirements as low as 3-5%.
Input the Interest Rate: Enter the annual percentage rate (APR) offered by your lender. Current mortgage rates vary based on market conditions, your credit score, loan type, and down payment amount. Different lenders offer different rates.
Select Your Loan Term: Select the length of your mortgage - typically 15, 20, or 30 years. Shorter terms result in higher monthly payments but less total interest paid over the life of the loan.
Add Additional Costs: Include annual property taxes, homeowners insurance, monthly PMI (if down payment is less than 20%), and HOA fees for the most accurate monthly payment calculation.
Important Mortgage Terms and Concepts
Amortization
Amortization is the process of paying off your mortgage through regular monthly payments. An amortization schedule shows how each payment is divided between principal and interest. Early in the loan, most of your payment goes toward interest; later, more goes toward principal reduction.
Private Mortgage Insurance (PMI)
PMI is insurance that protects the lender if you default on the loan. It's typically required when your down payment is less than 20% of the home's value. PMI can add $30-$70 per month for every $100,000 borrowed, depending on your loan-to-value ratio and credit score. You can usually cancel PMI once you reach 20% equity.
Escrow Account
An escrow account is a separate account managed by your mortgage servicer to pay property taxes and homeowners insurance on your behalf. Each month, a portion of your mortgage payment goes into escrow, and your servicer pays these bills when they're due.
Loan-to-Value Ratio (LTV)
LTV ratio compares your loan amount to the home's appraised value. For example, if you buy a $300,000 home with a $60,000 down payment, your LTV is 80% ($240,000 loan ÷ $300,000 value). Lower LTV ratios typically result in better interest rates and may eliminate PMI requirements.
APR vs. Interest Rate
The interest rate is the cost of borrowing the principal loan amount. The Annual Percentage Rate (APR) includes the interest rate plus other costs such as origination fees, discount points, and closing costs. APR gives you a more complete picture of the total cost of the loan.
Closing Costs
Closing costs are fees charged when finalizing your mortgage, typically 2-5% of the loan amount. These include appraisal fees, title insurance, attorney fees, loan origination fees, and prepaid property taxes and insurance. Some costs are negotiable or can be rolled into the loan amount.
Understanding Home Affordability Assessment
Home affordability assessment involves several guidelines that lenders use to evaluate borrowing capacity:
The 28/36 Rule
28%
Housing Expense Ratio
Lenders typically assess whether the total monthly housing payment (PITI) is within 28% of gross monthly income. This is also called the front-end ratio or housing ratio.
36%
Debt-to-Income Ratio (DTI)
Lenders commonly evaluate whether total monthly debt payments (including mortgage, car loans, student loans, credit cards) fall within 36% of gross monthly income. This is the back-end ratio.
Example: For someone with a gross monthly income of $6,000, the 28/36 rule evaluates whether housing payments are within $1,680 (28%) and whether total debt payments are within $2,160 (36%). Some lenders accept higher ratios (up to 43-50% DTI) for borrowers with strong credit or through certain loan programs.
Factors That Can Affect Your Monthly Mortgage Payment
Down Payment Size
Larger down payments reduce the loan amount, which decreases monthly payments and may eliminate PMI requirements. The difference between a 10% and 20% down payment can result in hundreds of dollars less per month.
Credit Score Impact
Credit scores significantly influence interest rates offered by lenders. Even a 0.5% rate difference can result in thousands of dollars in savings over the loan term. Scores above 740 typically receive the most favorable rates.
Discount Points
Discount points are prepaid interest that can lower your interest rate. Each point costs 1% of the loan amount and typically reduces the rate by approximately 0.25%, resulting in lower monthly payments.
Insurance Costs
Homeowners insurance premiums vary between providers. Bundling policies or adjusting deductibles are common practices that can affect premium costs and overall monthly payments.
Loan Term Length
A 30-year mortgage has lower monthly payments than a 15-year mortgage, though it results in more interest paid over time. Some borrowers make extra principal payments to accelerate payoff while maintaining lower required payments.
Interest Rate Changes
Mortgage refinancing to a lower rate can significantly reduce monthly payments. Borrowers often evaluate refinancing when market rates drop 0.75-1% below their current rate.
Comparing 15-Year and 30-Year Mortgages
15-year mortgages and 30-year mortgages have different characteristics that affect monthly payments and long-term costs. Here's a detailed comparison:
Feature
15-Year Mortgage
30-Year Mortgage
Monthly Payment
Higher
Lower
Total Interest Paid
Much Lower (50-60% less)
Higher
Interest Rate
Lower (typically 0.25-0.75% less)
Higher
Equity Building
Faster
Slower
Budget Flexibility
Less
More
Common User Scenarios
Higher income earners, those prioritizing interest savings, borrowers nearing retirement
Budget-conscious borrowers, those preferring lower payments, first-time buyers
Understanding Mortgage Refinancing
Mortgage refinancing involves replacing your current mortgage with a new one, typically to obtain a different interest rate, change the loan term, or access home equity. Common refinancing scenarios include:
•Interest rate changes: When market rates are significantly lower (typically 0.75-1% or more) than existing rates, some borrowers explore refinancing opportunities.
•Credit score improvement: Higher credit scores may qualify borrowers for more favorable rates than when they originally financed.
•PMI removal: Borrowers who have reached 20% equity can refinance to eliminate PMI payments.
•Loan term modification: Borrowers may switch from a 30-year to 15-year mortgage for faster payoff, or extend to a 30-year term for lower monthly payments.
•Cash-out refinance: Some homeowners access accumulated equity for various purposes such as home improvements or debt consolidation.
Refinancing involves closing costs (typically 2-5% of the loan amount). The break-even point represents how long it takes for monthly savings to offset closing costs, which is a factor many borrowers evaluate when considering refinancing.
First-Time Homebuyer Considerations
First-time homebuyers encounter various aspects of the home purchasing process. Here are common considerations:
Pre-Approval Process
Mortgage pre-approval is a common step in the house-hunting process. Pre-approval involves lenders examining income, assets, and credit to determine potential borrowing capacity. Many sellers view pre-approval as an indicator of buyer readiness.
First-Time Buyer Programs
Many states and localities offer first-time homebuyer programs with various benefits such as down payment assistance, rate reductions, or tax credits. FHA loans feature down payment options as low as 3.5%.
Additional Purchase Costs
Beyond the down payment, home purchases involve closing costs (2-5% of home price), moving expenses, potential immediate repairs, and ongoing maintenance expenses that arise with homeownership.
Home Inspection
Professional home inspections (typically $300-500) are commonly conducted before finalizing a purchase. Inspections can reveal property conditions, and results are sometimes used in purchase negotiations.
Frequently Asked Questions About Mortgages
How is my monthly mortgage payment calculated?
Your monthly mortgage payment consists of principal and interest (P&I), property taxes, homeowners insurance, and possibly PMI and HOA fees. The principal and interest are calculated using the loan amount, interest rate, and loan term in an amortization formula: M = P[r(1+r)^n]/[(1+r)^n-1], where M is the monthly payment, P is principal, r is monthly interest rate, and n is number of payments.
What is PMI and when do I need it?
PMI (Private Mortgage Insurance) is typically required when your down payment is less than 20% of the home's purchase price. It protects the lender if you default on the loan. PMI costs vary but typically range from 0.3% to 1.5% of the loan amount annually. You can usually remove PMI once you reach 20% equity through payments or property appreciation.
What's the difference between a 15-year and 30-year mortgage?
A 15-year mortgage has higher monthly payments but significantly lower total interest paid over the life of the loan. A 30-year mortgage has lower monthly payments providing more budget flexibility, but results in substantially more interest paid overall. 15-year mortgages typically have lower interest rates (0.25-0.75% less) than 30-year mortgages. The choice between them depends on factors such as budget constraints, financial objectives, and equity-building timeframes.
How do lenders evaluate housing affordability?
Lenders commonly apply the 28/36 rule when evaluating mortgage applications: assessing whether the total monthly housing payment (PITI) is within 28% of gross monthly income, and whether total debt payments are within 36% of gross income. For example, someone with a $5,000 monthly gross income would be evaluated on whether housing payments are under $1,400 and total debts under $1,800. Individual circumstances such as lifestyle, job stability, and financial goals are factors that borrowers consider when evaluating their own affordability.
What are the differences between fixed-rate and adjustable-rate mortgages?
Fixed-rate mortgages maintain the same interest rate throughout the loan term, providing payment stability and predictability. ARMs start with a lower rate that can change periodically based on market conditions. Fixed-rate mortgages are common among borrowers planning long-term homeownership who prefer payment certainty. ARMs are sometimes selected by those planning to move within 5-7 years, expecting income increases, or who are comfortable with rate variability.
What are typical credit score requirements for home loans?
Credit score requirements vary by loan type. Conventional loans typically require 620 or above, FHA loans accept 580 or above (or 500+ with 10% down), and VA and USDA loans generally require 620 or above. Higher scores tend to qualify for better interest rates. Scores of 740+ typically receive the most favorable rates, while each 20-point decrease can result in rate increases of 0.125-0.25%. Credit scores can be influenced by factors such as payment history, credit utilization, and recent credit inquiries.
What are closing costs and how much are they?
Closing costs are fees paid when finalizing a mortgage, typically 2-5% of the loan amount. They include appraisal fees ($300-500), title insurance ($500-1000), attorney fees ($500-1500), loan origination fees (0.5-1% of loan), credit report fees ($25-50), and prepaid property taxes and insurance. Some costs are negotiable, and in some transactions, sellers cover part of the costs or buyers roll them into the loan amount.
How does early mortgage payoff work?
Most mortgages allow early payoff without prepayment penalties, though some loans have penalties during the first 2-3 years. Making extra principal payments reduces total interest and shortens the loan term. Common approaches include bi-weekly payments (which equals 13 monthly payments yearly), adding extra to each payment, or making annual lump-sum payments. Even an extra $100 per month on a 30-year mortgage can result in thousands of dollars in interest savings and reduce the loan term by several years.
