How to use this mortgage calculator
Enter the home price, your down payment, the interest rate you were quoted, and the loan term. The calculator instantly shows your monthly principal and interest payment, a total that also includes property tax and homeowners insurance, and the total interest you would pay over the life of the loan. If you add an extra monthly principal payment, it re-runs the full amortization schedule and shows exactly how many months you would cut and how much interest you would avoid.
The yearly breakdown table lets you see something many borrowers never notice: in the early years of a 30-year loan, most of each payment goes to interest. On a $320,000 loan at 6.5%, more than 80% of the first year's payments are interest. The balance only starts falling quickly in the second half of the loan.
What goes into a monthly mortgage payment
Lenders often describe a full payment as PITI: principal, interest, taxes, and insurance. Principal and interest are fixed for the life of a fixed-rate loan. Property taxes and insurance are usually collected through an escrow account and can change every year as your assessment or premium changes. If you put less than 20% down on a conventional loan, you will usually also pay private mortgage insurance (PMI), and many condos and planned communities charge HOA dues. This calculator includes tax and insurance; add PMI or HOA to the insurance field if they apply to you.
Why extra payments save so much
Interest is charged on the remaining balance every month. Any extra dollar you pay toward principal lowers that balance immediately, which means every future month's interest is a little smaller, and more of your regular payment goes to principal. The effect compounds. With the default example, an extra $200 per month cuts several years off a 30-year mortgage and saves tens of thousands of dollars in interest. Even a single extra payment per year (for example, making biweekly half-payments) has a noticeable effect.
Before prepaying, confirm with your lender that extra amounts are applied to principal and that your loan has no prepayment penalty. Most modern residential mortgages in the US do not, but it is worth checking your note.
Should you prepay or invest instead?
Prepaying a mortgage gives a guaranteed return equal to your interest rate. Investing the same money might earn more on average, but with risk. Many people take a balanced approach: first capture any employer 401(k) match, build an emergency fund, and pay off high-interest debt, then decide how to split additional money between the mortgage and long-term investing. If your mortgage rate is high relative to safe savings yields, prepaying becomes more attractive.
Choosing a loan term
A 15-year loan has a higher monthly payment but usually a lower interest rate and dramatically less total interest. A 30-year loan keeps the required payment low and gives flexibility, and you can always prepay it voluntarily. Try both terms in the calculator to see the trade-off for your own numbers. A common rule of thumb from lenders is to keep total housing costs around 28% of gross monthly income, though actual approval limits depend on your full debt-to-income ratio, credit, and loan program.
Limitations of this estimate
This tool assumes a fixed rate, payments made on time every month, and constant tax and insurance amounts. It does not model adjustable-rate mortgages, PMI removal, points, or lender fees. Your Loan Estimate from a lender is the authoritative source for your actual costs.
Formula used
M = P × r / (1 − (1 + r)−n)
Where M is the monthly principal-and-interest payment, P is the loan amount (home price minus down payment), r is the annual rate divided by 12, and n is the number of monthly payments (years × 12). Each month, interest = balance × r, and the rest of the payment (plus any extra) reduces the balance.
Frequently asked questions
Does this include PMI?
Not automatically. If you will pay PMI, add its yearly cost to the insurance field to include it in the monthly total.
How is the extra payment applied?
It is applied entirely to principal every month, starting from the first payment, which shortens the loan rather than lowering the required payment.
Is a lower payment or a shorter loan better?
It depends on your goals. A shorter term saves interest; a longer term gives flexibility. You can take a 30-year loan and prepay to get some of both.
Why is my lender’s number different?
Lenders include exact escrow amounts, PMI, and may round differently. Treat this calculator as an estimate.
Keep planning
- Refinance Calculator — see if refinancing your mortgage pays off.
- Rent vs. Buy Calculator — compare renting vs. buying.
- Take-Home Pay Calculator — estimate your take-home pay to set a housing budget.
- Mortgage payment tables by loan amount — quick payments for $100k to $500k loans.