What does a mortgage calculator show?
A mortgage is a long-term loan secured on a property. Your monthly payment usually has four parts, often shortened to PITI: principal (repaying the amount borrowed), interest (the lender's charge), taxes (property tax, often collected monthly into an escrow account) and insurance (homeowners insurance). Many buildings and communities add a monthly HOA or service fee on top.
This calculator works out the principal and interest with the standard amortization formula, adds one twelfth of your annual tax and insurance plus any monthly HOA fee, and shows the total you can expect to pay each month.
How to use it
- Enter the home price and your down payment. The loan amount is the difference.
- Enter the interest rate and choose the loan term.
- Add your yearly property tax and insurance, and any monthly HOA fees. Leave them at zero to see principal and interest only.
- Review the monthly breakdown, total interest and the yearly amortization table.
How the monthly payment is calculated
M = L × r × (1 + r)n ÷ ((1 + r)n − 1)
Here L is the loan amount, r is the annual rate divided by 12 and by 100, and n is the number of monthly payments (30 years is 360 payments). The total monthly payment is then:
Total = M + (property tax ÷ 12) + (insurance ÷ 12) + HOA
Example
A 375,000 home with a 75,000 (20%) down payment leaves a 300,000 loan. At 6% over 30 years the principal and interest come to 1,798.65 a month. Adding 3,600 a year in property tax (300 a month) and 1,200 a year in insurance (100 a month) gives a total of about 2,198.65 a month. Over the full term you would pay roughly 347,515 in interest, more than the original loan, which is why the rate and term matter so much.
Switching the same loan to a 15-year term raises the principal and interest to about 2,531.57 a month but cuts total interest to around 155,683.
More worked examples
UK repayment mortgage: a £300,000 home with a £60,000 deposit at 4.5% over 25 years gives a monthly payment of about £1,334 and around £160,199 of interest. Leave the tax and HOA fields at zero for UK-style mortgages.
Canadian home loan: a C$500,000 home with 20% down at 5% over 25 years costs about C$2,338 a month before property tax. (Canadian lenders compound fixed rates semi-annually, so their figure may differ slightly.)
Things this estimate does not include
Closing costs, mortgage insurance (PMI) on loans with less than 20% down, points, and changes to adjustable rates are not included. Property tax and insurance also tend to rise over time. Ask your lender for an official loan estimate before you commit.
Common mistakes to avoid
- Budgeting on principal and interest only. Property tax, insurance and HOA dues can add hundreds a month.
- Ignoring the total interest. On a 30-year loan you can pay more in interest than you borrowed. Compare a 15-year term before deciding.
- Using the advertised rate without fees. Compare the APR, and use the loan EMI calculator to test different rates quickly.
Sources and methodology
The calculations on this page follow these published standards and references. The code is covered by automated tests against known values.
- Consumer Financial Protection Bureau – Buying a house
- Standard annuity (reducing-balance) loan formula, as used by banks for fixed-rate loans