How to Use This Mortgage Calculator
Start by entering the home price — the purchase price of the property you're considering. Then enter your planned down payment, either as a dollar amount or a percentage. The two fields sync automatically.
Select your loan term — 30 years is the most common, but 15 and 20-year loans come with lower interest rates and let you build equity much faster. Enter the interest rate you've been quoted, or use today's average (currently around 6.75–7.0% for a 30-year fixed in the US).
Click "Add taxes, insurance & HOA" to see your true all-in monthly payment. Many first-time buyers are surprised to find that taxes and insurance add $300–$600+ to the payment shown in online listings.
Understanding Your Results
Your monthly payment is split into two main parts: principal (the portion that reduces your loan balance) and interest (the cost of borrowing). In the early years of a 30-year mortgage, the vast majority of each payment goes toward interest — you can see this clearly in the amortization table above.
The total interest figure is often the most eye-opening number. On a $400,000 home with 20% down and a 30-year loan at 6.8%, you'll pay over $283,000 in interest alone over the life of the loan. Refinancing to a 15-year term cuts that figure nearly in half.
What Affects Your Mortgage Rate?
Lenders use several factors to determine the rate they offer you:
- Credit score — Scores above 740 typically qualify for the best rates. A 620 score can cost you 1–2% more in interest, which adds up to tens of thousands over the life of the loan.
- Down payment — A larger down payment reduces lender risk, which usually translates to a lower rate.
- Loan type — Conventional, FHA, VA, and USDA loans each have different rate structures and eligibility requirements.
- Loan term — 15-year loans typically come with rates 0.5–0.75% lower than 30-year loans.
- Debt-to-income ratio (DTI) — Lenders prefer a DTI under 43%. The lower, the better.
The 28/36 Rule — How Much House Can You Afford?
A widely-used guideline is the 28/36 rule: your monthly housing costs (mortgage + tax + insurance) should not exceed 28% of your gross monthly income, and your total monthly debt payments (housing + car + student loans + credit cards) should not exceed 36%.
For example, if you earn $8,000/month before taxes, you can likely afford up to $2,240/month in total housing costs. Use this calculator to find a home price that keeps you comfortably within that range.
15-Year vs. 30-Year Mortgage — Which Is Right for You?
This is one of the most important decisions in home financing. Here's a quick comparison using a $320,000 loan at current rates:
- 30-year at 6.8%: ~$2,087/month | Total interest: ~$431,000
- 15-year at 6.2%: ~$2,735/month | Total interest: ~$172,000
The 15-year mortgage costs $648 more per month but saves roughly $259,000 in interest. If you can comfortably afford the higher payment, the 15-year is almost always the better financial decision.
Frequently Asked Questions
How is my monthly mortgage payment calculated? +
Your base payment (principal + interest) uses the standard amortization formula: M = P[r(1+r)^n] / [(1+r)^n - 1], where P is the loan principal, r is the monthly interest rate (annual rate ÷ 12), and n is the total number of monthly payments. Property tax, insurance, PMI, and HOA are simply added to this base figure to get your total monthly payment.
What is a good down payment percentage? +
20% down is the traditional benchmark — it lets you avoid PMI and typically gets you a better interest rate. However, many programs accept much less: conventional loans can go as low as 3%, FHA loans accept 3.5% with a credit score of 580+, and VA and USDA loans may require zero down for eligible buyers. The "right" amount depends on your savings, the local market, and how long you plan to stay in the home.
What is PMI and when can I remove it? +
PMI (Private Mortgage Insurance) is required when your down payment is less than 20%. It protects the lender — not you — in case of default, and typically costs 0.5%–1.5% of the loan amount per year. By law (the Homeowners Protection Act), lenders must automatically cancel PMI when your loan balance reaches 78% of the original home value. You can request cancellation once you reach 80% through payments or appreciation.
Should I choose a 15-year or 30-year mortgage? +
A 30-year mortgage gives you lower monthly payments and more cash flow flexibility, but you pay far more in interest over time. A 15-year mortgage costs more per month but saves tens of thousands in interest and builds equity much faster. A common strategy is to take a 30-year mortgage but make extra principal payments when you can — you get flexibility without the obligation of a higher payment.
Does this calculator account for closing costs? +
No — this calculator focuses on your ongoing monthly payment. Closing costs are separate one-time expenses paid at the time of purchase, typically totaling 2%–5% of the loan amount. On a $320,000 loan, that's $6,400–$16,000. Ask your lender for a Loan Estimate document, which itemizes all closing costs, within 3 business days of applying for a mortgage.
How accurate is this calculator? +
This calculator uses the standard amortization formula used by lenders and produces results identical to what your lender would show for principal and interest. Estimates for tax and insurance are based on rates you enter, not actual quotes. For a precise quote, contact a licensed mortgage lender — they're required to provide a Loan Estimate within 3 business days of your application.