Mortgage Calculator
Calculate your monthly mortgage payment including principal, interest, property taxes, and insurance.
How Mortgage Payments Are Calculated
Your monthly mortgage payment is determined by the loan amount, interest rate, and loan term using the standard amortization formula. This calculator also adds property taxes and homeowners insurance to give you the full picture of your monthly housing cost, often referred to as PITI (Principal, Interest, Taxes, Insurance).
The Mortgage Payment Formula
The principal and interest portion uses this formula: M = P[r(1+r)^n] / [(1+r)^n - 1], where P is the loan amount, r is the monthly interest rate (annual rate divided by 12), and n is the total number of monthly payments (years times 12). Property taxes and insurance are simply divided by 12 and added to get your total monthly payment.
Understanding Amortization
In the early years of a mortgage, most of your payment goes toward interest rather than principal. On a $280,000 loan at 6.5%, your first payment of $1,770 includes about $1,517 in interest and only $253 in principal. This ratio gradually shifts until the final years, when most of each payment reduces your balance. This is why extra payments early on have the biggest impact.
Reducing Your Total Cost
A larger down payment reduces both your monthly payment and total interest. Even a 0.25% lower interest rate saves thousands over the life of a loan. Choosing a 15-year term dramatically cuts total interest — often by more than half. Shop multiple lenders, as rates and fees vary significantly. Consider buying mortgage points (prepaid interest) if you plan to stay in the home long-term.
Frequently Asked Questions
What is included in a monthly mortgage payment?
A typical monthly mortgage payment includes principal (paying down the loan balance), interest (the cost of borrowing), property taxes, and homeowners insurance — often called PITI. If your down payment is less than 20%, private mortgage insurance (PMI) is also required, adding $50-200+ per month.
Should I choose a 15-year or 30-year mortgage?
A 15-year mortgage has higher monthly payments but saves significantly on total interest and typically offers a lower rate (0.5-0.75% less). A 30-year mortgage has lower payments, giving you more monthly flexibility. If you can comfortably afford the 15-year payment, it's often the better financial choice.
How much house can I afford?
A common guideline is that your total housing payment (PITI) should not exceed 28% of your gross monthly income, and total debt payments should stay under 36%. Lenders may approve you for more, but staying within these ratios helps ensure you're not house-poor.
Does making extra payments help?
Yes. Even one extra payment per year on a 30-year mortgage can cut about 4-5 years off your loan and save tens of thousands in interest. Specify that extra payments go to principal, not future payments. Biweekly payment plans (26 half-payments = 13 full payments) achieve this automatically.