Mortgage Repayment Calculator
Your Estimated Payments
Principal Amount:
Monthly Payment (P&I):
Total Interest Paid:
Total Cost of Loan:
How to Calculate Your Mortgage Repayments
Understanding your potential monthly mortgage payment is the first step toward homeownership. This calculator uses the standard amortization formula to determine how much you will pay each month in Principal and Interest (P&I).
To use the calculator, simply enter the total purchase price of the home, your intended down payment, the length of the loan (usually 15 or 30 years), and the interest rate provided by your lender.
The Mortgage Formula
Lenders use a specific mathematical formula to calculate monthly repayments:
M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1 ]
- M: Total monthly payment
- P: Principal loan amount (Home Price – Down Payment)
- i: Monthly interest rate (Annual Rate / 12 months)
- n: Number of months (Loan Term in years x 12)
Realistic Example:
If you purchase a home for $500,000 with a 20% down payment ($100,000), you will need a loan for $400,000. At a 7% interest rate over 30 years:
- Monthly Payment: $2,661.21
- Total Interest Paid: $558,035.60
- Total Cost: $958,035.60
Factors That Affect Your Monthly Payment
While this calculator provides the Principal and Interest, keep in mind that your total monthly housing expense (often called PITI) may also include:
- Property Taxes: Usually calculated annually and divided by 12.
- Homeowners Insurance: Required by lenders to protect the asset.
- Private Mortgage Insurance (PMI): Typically required if your down payment is less than 20%.
- HOA Fees: Fees paid to a Homeowners Association for community maintenance.
Strategies to Lower Your Payment
If the calculated monthly payment is higher than your budget allows, consider these options:
- Increase your Down Payment: This reduces the principal amount borrowed and may eliminate PMI.
- Improve your Credit Score: Higher credit scores typically qualify for lower interest rates.
- Extend the Loan Term: Moving from a 15-year to a 30-year mortgage lowers the monthly payment, though you will pay more in interest over time.
- Buy Points: You can pay an upfront fee to the lender at closing to "buy down" your interest rate.