Mortgage Calculator

How this is calculated

Financing 280,000 (after your 70,000 down payment) over 30 years at 6.5% gives a monthly principal & interest payment of 1,769.79.

• This covers principal and interest only — property tax, insurance, and HOA fees are not included.
• Total interest paid over the full term is estimated at 357,124.57.
• A larger down payment reduces both the loan amount and the total interest paid.

How mortgage payments are calculated

A mortgage payment typically has four components, often abbreviated PITI: Principal, Interest, Taxes, and Insurance. The principal-and-interest portion is calculated using standard loan amortization, while property taxes and homeowners insurance are usually collected monthly into an escrow account.

The principal & interest formula

P is the loan amount, r is the monthly interest rate, and n is the number of monthly payments (360 for a 30-year loan). A $350,000 mortgage at 6.5% over 30 years has a principal-and-interest payment of about $2,212/month, before taxes and insurance.

What makes up a full mortgage payment

• Principal — the portion that pays down the loan balance.
• Interest — the cost of borrowing, calculated on the outstanding balance.
• Property taxes — assessed by local government, often collected monthly and held in escrow.
• Homeowners insurance — required by most lenders, also often escrowed.
• PMI (Private Mortgage Insurance) — typically required if the down payment is below 20% of the home's value.

$350,000 loan — payment by rate and term

Rate	30-year payment (P&I)	15-year payment (P&I)
5.5%	$1,987	$2,860
6.5%	$2,212	$3,050
7.5%	$2,447	$3,245

Tips for homebuyers

• A 20% down payment avoids PMI and reduces the loan amount, cutting monthly cost.
• Shop rates from multiple lenders — even a 0.25% difference matters significantly over 30 years.
• Factor in closing costs, maintenance, and HOA fees, not just the mortgage payment, when budgeting.

Worked examples

Example 1 — First-time buyer, 10% down: A $280,000 home with 10% down ($28,000) finances $252,000 at 6.5% over 30 years, giving a P&I payment of about $1,592/month, plus likely PMI since the down payment is under 20%.

Example 2 — 20% down avoids PMI: The same $280,000 home with 20% down ($56,000) finances $224,000, giving a payment of about $1,416/month — lower, and without any PMI requirement.

Example 3 — Refinancing partway through: A homeowner with $220,000 remaining on a 6.5% mortgage who refinances into a new 5.25% rate over a fresh 30-year term lowers their P&I payment by roughly $260/month, though it restarts the amortization clock.

Estimated full monthly payment (PITI) example — $350,000 loan, 6.5%, 30 years

Component	Approx. monthly cost
Principal & interest	$2,212
Property taxes (est. 1.1%/yr)	$321
Homeowners insurance	$125
PMI (if under 20% down)	$145
Estimated total	~$2,803

Frequently asked questions

Why is my actual payment higher than the P&I calculation? The difference is usually property taxes, homeowners insurance, PMI, or HOA dues added on top of principal and interest.

Is a 15-year or 30-year mortgage better? A 15-year term has a higher monthly payment but far less total interest; a 30-year term offers lower payments and more monthly flexibility.

When can I remove PMI? PMI can typically be removed once your loan balance drops to 80% of the home's original value, either automatically or by request.

What's an escrow account, and why does my lender want one? An escrow account collects a portion of property taxes and insurance each month so the lender can pay those bills on your behalf when due, reducing the risk of a lapse in coverage or unpaid taxes.

How does an adjustable-rate mortgage (ARM) differ from a fixed-rate mortgage? An ARM starts with a fixed rate for an initial period (e.g., 5 or 7 years) then adjusts periodically based on a market index, while a fixed-rate mortgage keeps the same rate for the entire loan term.

Does a bigger down payment always make sense? Not necessarily — a larger down payment reduces monthly cost and may avoid PMI, but tying up more cash upfront has a trade-off against liquidity and other financial goals, which is worth weighing individually.

How much does closing cost typically add to a home purchase? Closing costs commonly run roughly 2–5% of the loan amount, covering items like origination fees, appraisal, title insurance, and recording fees — separate from the down payment itself.

Another worked example

Consider a smaller loan: financing $200,000 (after a $50,000 down payment on a $250,000 home) over 15 years at 6.0% gives a monthly principal & interest payment of roughly $1,687 — noticeably higher than a 30-year payment on the same amount, but with dramatically less total interest paid over the life of the loan since the balance is paid down much faster.

What affects the result

• Interest rate — even a 0.5% difference can change total interest paid by tens of thousands of dollars over 30 years.
• Loan term — a 15-year mortgage has higher monthly payments but far less total interest than a 30-year mortgage.
• Down payment — a larger down payment lowers the loan amount and may help you avoid private mortgage insurance (PMI), typically required when the down payment is under 20%.
• Credit score — lenders offer lower rates to borrowers with higher credit scores.
• This calculator estimates principal & interest only — it does not include property tax, homeowners insurance, PMI, or HOA fees, which are commonly bundled into a real monthly mortgage bill (often called PITI).

How to use this calculator

1. Enter the home price you're considering.
2. Enter your planned down payment amount.
3. Enter the annual interest rate quoted by your lender.
4. Enter the loan term in years (commonly 15 or 30).
5. Press Calculate to see your estimated monthly principal & interest payment.

Common mistakes to avoid

• Forgetting that the displayed payment excludes property tax, insurance, and HOA fees — your actual bill will be higher.
• Comparing rates without comparing points and fees — a lower rate with high points can cost more upfront.
• Choosing the longest term automatically without checking how much extra total interest it adds.
• Not shopping multiple lenders — even 0.25% difference in rate is significant on a 30-year loan.

Key terms explained

Principal: The original loan amount borrowed, before interest.

Amortization: The schedule by which a loan is gradually paid off through regular payments.

Equity: The portion of your home's value that you actually own — home value minus remaining loan balance.

Escrow: An account, often managed by the lender, that holds funds for property tax and insurance, collected as part of your monthly payment.

Refinance: Replacing an existing mortgage with a new loan, usually to get a better rate or different term.

More questions about this calculator

What's the difference between a fixed-rate and adjustable-rate mortgage?
A fixed-rate mortgage keeps the same interest rate for the entire term, so payments stay predictable. An adjustable-rate mortgage (ARM) starts with a lower rate that can rise or fall after an initial period, which adds risk but can save money if rates stay low or you sell before the adjustment.

How much house can I actually afford?
A common guideline is keeping total housing costs (mortgage, tax, insurance) under 28% of gross monthly income, and total debt payments under 36%. Lenders use similar debt-to-income limits when approving loans.