Mortgage Payment Calculator
Estimate your monthly payments and total loan costs instantly.
Monthly Principal & Interest:
$0.00
Total Loan Amount:
$0.00
Total Interest Paid:
$0.00
Total Cost of Loan:
$0.00
How to Use the Mortgage Payment Calculator
Buying a home is one of the most significant financial decisions you'll ever make. Our mortgage calculator helps you break down the costs into manageable monthly figures so you can shop for a home with confidence.
Understanding the Inputs
- Home Price: The total purchase price of the property.
- Down Payment: The cash you pay upfront. A higher down payment reduces your loan amount and can eliminate the need for Private Mortgage Insurance (PMI) if it's at least 20%.
- Interest Rate: The annual cost of borrowing money, expressed as a percentage.
- Loan Term: The duration of the loan. While 30 years is standard, 15-year terms often offer lower interest rates but higher monthly payments.
The Mortgage Calculation Formula
The monthly payment (Principal and Interest) is calculated using the following mathematical formula:
M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1 ]
Where:
- M: Total monthly payment
- P: Principal loan amount
- i: Monthly interest rate (annual rate divided by 12)
- n: Number of months (years multiplied by 12)
Realistic Example
Imagine you are purchasing a home for $500,000 with a 20% down payment ($100,000). You secure a 30-year fixed rate at 7%.
- Loan Amount: $400,000
- Monthly Payment: Approximately $2,661.21
- Total Interest over 30 years: $558,035.60
- Total Cost: $958,035.60 (plus your initial $100,000 down payment)
3 Tips to Lower Your Monthly Mortgage Payment
1. Improve Your Credit Score: Higher credit scores typically qualify for lower interest rates, which can save you hundreds of dollars per month.
2. Make a Larger Down Payment: If you can reach the 20% threshold, you avoid PMI, which usually costs between 0.5% and 1.5% of the loan amount annually.
3. Shop Around: Interest rates vary by lender. Getting quotes from at least three different mortgage providers can help you find the most competitive deal.