Mortgage Payment Calculator
Use this calculator to estimate your monthly mortgage payments, including principal and interest. Understanding your potential monthly costs is a crucial step in the home-buying process.
Understanding Your Mortgage Payment
A mortgage payment is typically the largest monthly expense for homeowners. It's essential to understand how it's calculated and what factors influence it. Our Mortgage Payment Calculator helps you quickly estimate your principal and interest portion of your monthly payment.
What Makes Up Your Mortgage Payment?
While our calculator focuses on the principal and interest (P&I), a full mortgage payment often includes other components, commonly referred to as PITI:
- Principal: This is the portion of your payment that goes towards reducing the actual loan amount you borrowed.
- Interest: This is the cost of borrowing money, paid to the lender. In the early years of a mortgage, a larger portion of your payment goes towards interest.
- Taxes: Property taxes, assessed by your local government, are often included in your monthly mortgage payment and held in an escrow account by your lender.
- Insurance: This includes homeowner's insurance (protects your home from damage) and sometimes private mortgage insurance (PMI) if your down payment is less than 20% of the home's value. These are also often held in escrow.
How the Calculator Works
Our calculator uses the standard mortgage payment formula to determine your monthly principal and interest payment:
M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1]
- M = Monthly Payment
- P = Principal Loan Amount (Home Price – Down Payment)
- i = Monthly Interest Rate (Annual Interest Rate / 12 / 100)
- n = Total Number of Payments (Loan Term in Years * 12)
By inputting your home price, down payment, annual interest rate, and loan term, the calculator quickly provides an estimate of your monthly P&I payment, total amount paid over the loan term, and the total interest you'll pay.
Factors Affecting Your Mortgage Payment
- Loan Amount: The larger the amount you borrow, the higher your monthly payment will be. A larger down payment reduces your loan amount.
- Interest Rate: Even a small difference in the interest rate can significantly impact your monthly payment and the total interest paid over the life of the loan.
- Loan Term: Shorter loan terms (e.g., 15 years) result in higher monthly payments but less total interest paid. Longer terms (e.g., 30 years) have lower monthly payments but accrue more interest over time.
- Credit Score: A higher credit score typically qualifies you for a lower interest rate.
- Loan Type: Different loan types (e.g., fixed-rate, adjustable-rate, FHA, VA) have varying terms and interest rate structures.
Tips for Managing Your Mortgage
- Save for a Larger Down Payment: A larger down payment reduces your principal loan amount, lowering your monthly payments and potentially eliminating the need for PMI.
- Improve Your Credit Score: A better credit score can secure you a lower interest rate, saving you thousands over the life of the loan.
- Shop Around for Lenders: Different lenders offer different rates and terms. Compare offers to find the best deal.
- Consider Shorter Loan Terms: If affordable, a 15-year mortgage can save you a substantial amount in interest compared to a 30-year loan.
- Refinance: If interest rates drop significantly after you've secured your mortgage, refinancing could lower your monthly payments.
Mortgage Payment Examples
Here are a few examples to illustrate how different inputs affect your mortgage payment:
- Example 1: Standard 30-Year Fixed
- Home Price: $300,000
- Down Payment: $60,000 (20%)
- Loan Amount: $240,000
- Annual Interest Rate: 6.5%
- Loan Term: 30 Years
- Estimated Monthly Payment: $1,516.90
- Total Amount Paid: $546,084.00
- Total Interest Paid: $306,084.00
- Example 2: Shorter Term, Higher Payment
- Home Price: $450,000
- Down Payment: $90,000 (20%)
- Loan Amount: $360,000
- Annual Interest Rate: 7.0%
- Loan Term: 15 Years
- Estimated Monthly Payment: $3,235.92
- Total Amount Paid: $582,465.60
- Total Interest Paid: $222,465.60
- Example 3: Lower Down Payment, Higher Interest
- Home Price: $250,000
- Down Payment: $25,000 (10%)
- Loan Amount: $225,000
- Annual Interest Rate: 7.2%
- Loan Term: 30 Years
- Estimated Monthly Payment: $1,530.00
- Total Amount Paid: $550,800.00
- Total Interest Paid: $325,800.00