Mortgage Calculator
Estimate your monthly mortgage payment, total interest, and total loan cost. Enter the home price, down payment, interest rate, and loan term to get an instant breakdown.
How a mortgage payment is calculated
The monthly principal-and-interest payment comes from the standard amortisation 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 payments.
Every payment is split between interest and principal, but not evenly. Early payments are mostly interest, because interest is charged on the outstanding balance and the balance is at its largest. That ratio shifts gradually over the term.
A worked example
A $350,000 home with 20% down leaves a $280,000 loan. At 6.5% over 30 years, principal and interest come to about $1,770 a month.
Across the full term you’d pay roughly $637,125 — about $357,125 in interest, more than the original loan. This is why even a small rate difference matters so much: at 5.5% the same loan costs around $1,590 a month, saving close to $65,000 over the term.
What else belongs in the monthly figure
Principal and interest is only part of what you’ll pay. Lenders think in terms of PITI: principal, interest, taxes and insurance. Property taxes and homeowner’s insurance are usually collected monthly into an escrow account. If your down payment is under 20%, private mortgage insurance is typically added too.
Budget for maintenance separately — a common planning figure is 1% of the home’s value per year. On a $350,000 home that’s around $3,500 annually, and it isn’t optional spending. For the affordability side of this decision, see our guide on how much house you can actually afford.
Common mistakes people make with mortgage math
- Budgeting only for principal and interest. Taxes, insurance and PMI can add several hundred dollars a month.
- Focusing on the payment instead of the total cost. Stretching a loan from 15 to 30 years lowers the monthly figure and substantially raises lifetime interest.
- Confusing interest rate with APR. APR folds in lender fees and points, so it’s the fairer number for comparing offers.
- Skipping the escrow adjustment. Property taxes rise. Your monthly payment can increase even on a fixed-rate loan.
What this calculator doesn’t account for
It calculates principal and interest on a fixed-rate loan. It excludes property taxes, homeowner’s insurance, PMI, HOA dues, closing costs and maintenance. It doesn’t model adjustable-rate mortgages, extra principal payments, or refinancing. Get a Loan Estimate from a lender for figures specific to your situation — that document is standardised and designed for exactly this comparison.
Frequently Asked Questions
Does this monthly payment include taxes and insurance?
No, this shows principal and interest only (the “P&I” portion). Your actual monthly mortgage payment will also include property taxes, homeowners insurance, and possibly PMI or HOA fees, often adding several hundred dollars more depending on your area.
How much should my down payment be?
20% avoids private mortgage insurance (PMI) on a conventional loan, but many buyers put down far less – FHA loans allow as little as 3.5%. A smaller down payment means a larger loan balance and more total interest over the life of the loan, as this calculator shows.
How much does the interest rate actually matter?
Enormously. On a $280,000 30-year loan, moving from 6.5% to 7.5% raises the monthly payment by roughly $200 and adds over $70,000 in total interest over the loan’s life – always shop multiple lenders for rate quotes.