How the monthly payment is calculated
A fixed-rate mortgage is paid back in equal monthly installments. Each payment first covers the interest for that month, and the rest pays down the loan. At the start most of the payment is interest; toward the end almost all of it is principal. The chart under the calculator shows this shift year by year. The same math works when you refinance: enter the remaining balance as the loan amount, the new rate and the new term, and compare the payment with what you pay today.
What goes into the full payment
- Principal and interest: the loan payment itself, fixed for the whole term.
- Property tax: set by your local government, often around 1 percent of the home value per year in the US, but anywhere from about 0.3 to over 2 percent.
- Home insurance: required by lenders; the price depends on the home, location and coverage.
- PMI: private mortgage insurance when the down payment is under 20 percent, until the balance falls to 78 percent of the price.
- HOA fees: for condos and planned communities. Outside the US, enter service charges here.
15 or 30 years?
A shorter term means higher monthly payments but far less interest, and 15-year loans usually come with a lower rate. Here is a $320,000 loan with example rates:
| Term | Rate | Monthly payment | Total interest |
|---|---|---|---|
| 15 years | 5.75% | $2,657 | $158,316 |
| 30 years | 6.5% | $2,023 | $408,142 |
How to use the mortgage calculator
- 1Enter the home price, your down payment as a percentage or amount, the interest rate and the loan term.
- 2Adjust property tax, insurance, PMI and HOA fees for the home you have in mind, or set them to 0 to see principal and interest only.
- 3Try an extra monthly payment to see how much sooner you could be done. Copy the result, share a link, or download the full schedule as a CSV file for a spreadsheet.
Frequently asked questions
What is included in the monthly payment?
Principal and interest on the loan, plus property tax, home insurance, private mortgage insurance (PMI) if your down payment is under 20 percent, and HOA fees if you enter them. Lenders often call this PITI. Taxes and insurance are estimates, so check the real figures for the home you want.
What is PMI and when does it go away?
Private mortgage insurance protects the lender when you put down less than 20 percent. It usually costs 0.3 to 1.5 percent of the loan per year. On conventional US loans it ends automatically once the balance reaches 78 percent of the original home price, and you can ask to remove it at 80 percent. The calculator stops charging it at 78 percent.
How much house can I afford?
A common guideline is the 28/36 rule: keep the full housing payment under 28 percent of your gross monthly income, and all debt payments together under 36 percent. With a gross income of $8,000 a month, that means a housing payment of up to about $2,240.
Do extra payments really make a difference?
Yes, because every extra dollar goes straight to principal and stops charging interest from that month on. On a $320,000 loan at 6.5 percent over 30 years, an extra $200 a month pays the loan off about six and a half years early and saves over $100,000 in interest.
Is this an exact quote?
No. It is an estimate based on the numbers you enter. Your lender adds closing costs, may escrow taxes and insurance differently, and property taxes and insurance usually rise over time. Use it to compare options, not as financial advice.