Mortgage Calculator
Calculate your monthly mortgage payment, total interest, and loan costs. Plan your home purchase with accurate amortization calculations.
Formula:
M = P × [r(1 + r)ⁿ] / [(1 + r)ⁿ - 1]
Where M = Monthly Payment, P = Principal, r = Monthly Interest Rate, n = Number of Payments
What is a Mortgage Calculator?
A mortgage calculator is a financial tool that helps you estimate your monthly mortgage payment based on the loan amount, interest rate, and loan term. It uses the amortization formula to calculate how much you'll pay each month and how much interest you'll pay over the life of the loan.
Understanding your potential mortgage payment is crucial before making a home purchase. This calculator helps you determine what you can afford, compare different loan scenarios, and plan your budget accordingly. It's an essential tool for first-time homebuyers and experienced real estate investors alike.
The mortgage payment formula is: M = P × [r(1 + r)ⁿ] / [(1 + r)ⁿ - 1], where M is the monthly payment, P is the principal loan amount, r is the monthly interest rate, and n is the number of payments.
Understanding Mortgage Calculator Inputs
Loan Amount
The principal amount you borrow. This is typically the home price minus your down payment. Larger down payments result in lower monthly payments and less interest paid.
Interest Rate
The annual percentage rate (APR) charged by the lender. Even small differences in rates can significantly impact your total cost over the loan term.
Loan Term
The length of time to repay the loan. Common terms are 15, 20, or 30 years. Shorter terms mean higher payments but less total interest paid.
How to Use This Mortgage Calculator
- Enter the loan amount: Input the total amount you plan to borrow (home price minus down payment).
- Enter the interest rate: Input the annual interest rate offered by your lender (e.g., 3.5%).
- Enter the loan term: Input how many years you'll take to repay the loan (typically 15 or 30 years).
- Review your results: See your monthly payment, total payment over the loan term, and total interest paid.
- Compare scenarios: Try different amounts, rates, and terms to find the best option for your budget.
Frequently Asked Questions
How is a mortgage payment calculated?
A mortgage payment is calculated using the loan amount (principal), interest rate, and loan term. The formula uses compound interest to determine a fixed monthly payment that will pay off both principal and interest over the loan period. Our calculator uses the standard amortization formula to provide accurate results.
What is included in a monthly mortgage payment?
A monthly mortgage payment typically includes principal (the amount borrowed) and interest. Many lenders also include property taxes, homeowners insurance, and sometimes HOA fees in what's called PITI (Principal, Interest, Taxes, Insurance). This calculator focuses on the principal and interest portion.
How much house can I afford?
Financial experts typically recommend that your monthly mortgage payment should not exceed 28% of your gross monthly income. For example, if you earn $6,000/month, your mortgage payment should ideally be under $1,680. Use our calculator to see what loan amount fits your budget.
Should I choose a 15-year or 30-year mortgage?
A 15-year mortgage has higher monthly payments but significantly less total interest paid over the life of the loan. A 30-year mortgage has lower monthly payments but costs more in interest. Choose based on your budget and how quickly you want to build equity. Use our calculator to compare both options.
How does the interest rate affect my payment?
The interest rate has a significant impact on your monthly payment and total cost. Even a 1% difference in interest rate can result in thousands of dollars over the life of a loan. For a $300,000 loan, the difference between 3.5% and 4.5% is about $150/month and $54,000 over 30 years.