What to enter
Every field has a realistic starting value so the page works immediately, but the defaults are examples, not quotes. Replace them with numbers from the listing, a lender’s Loan Estimate or your own records.
- Home price
- The purchase price you expect to pay, or the listing price if you are still browsing. The price drives the loan amount, the property tax estimate and the down payment percentage.
- Down payment
- Enter it as a percentage of the price or as a dollar amount. Switching the selector converts the meaning of the field, so use whichever matches how you are saving. A down payment below 20% turns on the mortgage insurance line.
- Loan term
- Thirty years is the most common term. Shorter terms such as 15 or 20 years raise the monthly payment but cut the total interest sharply.
- Interest rate (APR)
- Use the rate on a quote, not a headline rate from an advertisement. Rates depend on your credit profile, the down payment, the loan type and whether you pay discount points.
- Property tax rate
- A yearly percentage of the home price. Effective rates run from well under half a percent in some places to more than two percent in others, so look up the county or ask the listing agent for the last bill. Some jurisdictions reassess after a sale, which can make the first bill higher than the seller’s.
- Homeowners insurance
- The yearly premium in dollars. Quotes vary with the home’s age, roof, location and coverage limits, so treat the default as a placeholder until you have a quote.
- HOA dues
- Monthly association fees for condos, townhomes and planned communities. Dues are a housing cost that lenders count, and they can rise.
- PMI rate
- Private mortgage insurance, as a yearly percentage of the loan amount. It is only charged when the down payment is under 20%. The rate you are offered depends mostly on credit score and down payment.
- Extra principal payment
- Optional. An amount added to the payment each month and applied entirely to principal. Leave it at zero to see the base case.
How to read your results
The large number at the top is the total monthly payment: principal and interest plus every other housing cost you entered. That is the amount your budget needs to absorb each month. The table beneath it breaks the total into its parts, and the donut chart shows how much of each payment goes where.
Two parts of the payment behave differently. Principal and interest is fixed for the life of a fixed-rate loan. Property tax and insurance are not; they change when assessments and premiums change, which is why many buyers’ payments creep up even though their rate never moves.
The loan summary shows the total interest you would pay if you kept the loan to the end, and the amortization schedule lets you see the balance year by year or month by month. Use the schedule to find the point where half the loan is paid off, or where your balance drops below 80% of the purchase price and PMI can end. If you entered an extra payment, a separate block shows the time and interest it saves compared with the base loan.
How the payment is calculated
For a fixed-rate loan with equal monthly payments, principal and interest come from the standard annuity formula:
The other costs are simple divisions of yearly amounts:
Insurance = yearly premium ÷ 12
PMI = loan × PMI rate ÷ 12PMI is only added when the down payment is under 20% of the price.
The total monthly payment is the sum of those pieces plus HOA dues. To build the schedule, the calculator charges interest each month on the remaining balance (balance × r), subtracts that interest from the payment to get the principal portion, and reduces the balance by that amount. An extra payment is added to the principal portion, which is why it shortens the loan.
PMI in this estimate stops when the scheduled balance falls to 80% of the original purchase price. Real cancellation rules are more specific, as the PMI section below explains.
Worked example
A $400,000 home with 20% down
Take a $400,000 home, 20% down ($80,000), a 30-year term and a 6.75% rate. The loan is $320,000. With a monthly rate of 0.5625% and 360 payments, the formula gives principal and interest of $2,075.51.
At a 1.1% property tax rate and $1,600 a year of insurance, tax adds $366.67 a month and insurance adds $133.33. There is no PMI at 20% down, so the total is $2,575.51 a month. Over 30 years the loan costs $427,185 in interest, which is 133% of the amount borrowed.
Same home, 10% down. The loan grows to $360,000, principal and interest rises to $2,334.95, and PMI adds $180.00 a month until the balance reaches 80% of the price, about 8 years 2 months in. The total payment becomes $3,014.95.
Same home, 20% down, $200 extra each month. The loan is paid off in 23 years 4 months instead of 30 years, and total interest falls from $427,185 to $315,107, a saving of $112,078.
Why early payments are mostly interest
Interest is charged on the balance, and the balance is largest at the start. In the example above, year 1 payments total $24,906, of which $21,496 (86%) is interest and only $3,410 reduces the loan. By year 15 the split is $16,155 interest to $8,751 principal, and in year 30 only $887 of the $24,906 paid is interest.
This has practical consequences. Selling or refinancing in the first several years means you will have repaid little principal, so most of your equity comes from the down payment and any price appreciation rather than from the loan itself. It also explains why extra payments early in the loan are so effective: each dollar of principal you remove today stops accruing interest for the rest of the term. The same $200 extra payment made in year 25 would save far less.
Compare terms to see the effect on cost. The 15-year version of the example has a principal-and-interest payment of $2,831.71 and total interest of $189,708, versus $2,075.51 and $427,185 for 30 years. The shorter loan asks for $756 more each month and saves $237,477 in interest, though a lower monthly obligation on the 30-year loan leaves more flexibility if income drops.
Mortgage insurance and how it ends
Private mortgage insurance protects the lender, not you, when a conventional loan starts with less than 20% down. It is usually a yearly percentage of the loan, billed monthly. The rate you are offered depends on your credit score and down payment, so ask lenders for a PMI quote alongside the interest rate; a slightly higher rate with cheaper PMI can cost less overall.
Under the federal Homeowners Protection Act, a borrower on a conventional loan can generally ask to cancel PMI once the balance reaches 80% of the home’s original value, provided the account is current and there are no junior liens or value problems. PMI must generally terminate automatically when the balance is scheduled to reach 78% of the original value. The CFPB’s guidance covers the details, including a final termination date. Because this calculator drops PMI at the 80% mark of the purchase price, its ending point is a close but simplified estimate.
Government-backed loans work differently. FHA loans carry a mortgage insurance premium, VA loans have a funding fee, and USDA loans have guarantee fees, each with its own rules for how long it lasts. If you are considering one of those programs, use the lender’s figures instead of the PMI line here.
What this estimate leaves out
A mortgage payment is only part of what a home costs. The estimate does not include:
- Closing costs. Lender fees, title insurance, appraisal, prepaid interest and escrow deposits are paid at closing and are often a few percent of the loan amount. Your Loan Estimate lists them line by line.
- Discount points. Paying points lowers the rate in exchange for cash up front. The rate you enter should already reflect any points you plan to buy.
- Maintenance and repairs. Roofs, water heaters and appliances need replacing, and older homes need more upkeep. Many owners set aside a percentage of the home’s value each year.
- Utilities and special assessments. Heating, cooling, water, trash and any HOA special assessments come on top of the payment.
- Adjustable rates. The calculation assumes the rate stays fixed. An adjustable-rate mortgage can reset to a higher or lower payment after its introductory period.
- Tax effects. Mortgage interest and property taxes may be deductible for people who itemize, subject to limits described in IRS Publication 936. This tool does not estimate any tax benefit.
Building these costs into your budget before you make an offer is the single best way to avoid being house-poor. If you are still deciding how much home you can afford, the home affordability calculator works backward from your income, and the take-home pay calculator shows how a payment compares with the money that actually reaches your account.
Frequently asked questions
How much of my payment goes to interest?
At the start of a 30-year loan, most of it. In the default example about 86% of year-one principal-and-interest payments is interest. The share falls every month as the balance shrinks, so the amortization schedule on this page is the best way to see the split at any point in the loan.
Why is my lender’s payment different from this estimate?
The usual reasons are the property tax and insurance figures, which are estimates here, the exact interest rate and any points, and mortgage insurance. Lenders also round differently and may collect an escrow cushion. Use your Loan Estimate for the authoritative number and this tool to compare scenarios.
Does an extra payment go straight to principal?
This calculator assumes it does. In practice you should tell your servicer that the additional amount is for principal only, and confirm it is applied to the balance instead of being treated as an early payment of next month’s bill. Also check whether your loan has a prepayment penalty, which is uncommon on modern conventional loans but worth confirming.
Is a 15-year or 30-year mortgage better?
Neither is better in general. A 15-year loan usually has a lower rate and much lower total interest, but a higher required payment. A 30-year loan keeps the required payment lower and lets you make voluntary extra payments when you can. The mortgage payment calculator puts the terms side by side for the same loan amount.
Should I put 20% down?
Twenty percent avoids PMI on a conventional loan, but it is not required. Many buyers put down less to keep cash for repairs, moving costs and an emergency fund. Compare the PMI cost against what the cash would do elsewhere, and keep enough in reserve to handle surprises.
Are the results financial advice?
No. They are estimates based on the numbers you enter and the assumptions listed on this page. A lender, housing counselor or licensed advisor can review your actual situation.
Sources and further reading
- CFPB: Owning a Home Loan Estimate and Closing Disclosure explainers.
- CFPB: When can I remove private mortgage insurance (PMI) from my loan?
- IRS Publication 936: Home Mortgage Interest Deduction