How to use the mortgage calculator
Enter the home price, your down payment as a percentage, the loan term and the interest rate. Add your annual property tax and home insurance, and any monthly HOA or service fees, to see the full monthly cost of owning the home.
What makes up a mortgage payment
- Principal: the part of each payment that reduces the loan balance.
- Interest: the lender's charge for borrowing, highest at the start of the loan.
- Property tax and insurance: often collected monthly by the lender through an escrow account.
- HOA fees: charged by some condominiums and planned communities.
Mortgage payment formula
The monthly principal and interest is M = P × r ÷ (1 − (1 + r)^−n), where P is the loan amount, r is the annual rate divided by 12, and n is the number of monthly payments.
Reading the amortization schedule
The schedule shows how much principal and interest you pay each year and the balance left at the end of it. Early on, most of each payment goes to interest. Over time the balance falls and more of every payment goes toward principal.
Frequently asked questions
How much house can I afford?
A common guideline is to keep total housing costs, including taxes and insurance, below about 28% of your gross monthly income. Use the calculator to test different prices and down payments.
Does a bigger down payment lower my payment?
Yes. A larger down payment reduces the loan amount, which lowers both the monthly payment and the total interest paid.
What is the difference between a 15-year and 30-year mortgage?
A 15-year loan has higher monthly payments but far less total interest. A 30-year loan has lower payments but costs more over its life.