Mortgage Calculator

How a mortgage payment works

A standard fixed-rate mortgage payment is built from principal and interest (often abbreviated as P&I). Principal is the portion that reduces your loan balance, while interest is the cost of borrowing calculated on the remaining balance. Early in the loan, the interest portion is larger; over time, the balance declines and more of each payment goes toward principal.

In practice, many homeowners pay more than P&I each month. Lenders (or servicers) often collect “escrow” for property taxes and homeowners insurance, and some properties have HOA dues. The calculator above separates these ideas: it computes the P&I payment based on the loan amount, rate, and term, then adds optional monthly estimates for taxes, insurance, and HOA to show a more realistic monthly housing budget.

Use this calculator as a planning tool. Real-world mortgage pricing can vary with credit score, points, lender fees, PMI, and local tax/insurance rules. Still, the P&I math is consistent and makes it easier to compare scenarios like a higher down payment, a shorter term, or a different interest rate.

For budgeting, the most important shift is to think in “all-in monthly housing cost,” not only the mortgage payment. Taxes and insurance can change over time, and HOA dues can vary by property. This calculator keeps those items visible so you can plan for affordability, not just qualification.

Key inputs (and what they change)

Home price and down payment determine the loan amount. A larger down payment reduces the principal you borrow, which typically lowers the monthly payment and total interest. It can also reduce or eliminate mortgage insurance (PMI) depending on the lender’s rules.

Interest rate and term are the two biggest payment drivers after principal. A lower rate reduces interest each month; a shorter term reduces the number of payments. Shorter terms often have higher payments but can drastically reduce lifetime interest.

Property tax and home insurance are not part of P&I, but they are part of what you’ll actually pay monthly if escrow is required (or if you set aside funds yourself). If you’re comparing homes in different areas, taxes can be as important as the mortgage rate in total affordability.

How to interpret the amortization chart

The remaining-balance chart shows how quickly you build equity through principal paydown. In a fixed-rate mortgage, the balance declines slowly at first, then faster later — not because the payment changes, but because interest declines as the balance declines.

The principal vs. interest breakdown helps you see the long-run cost of borrowing. Two scenarios can have similar monthly payments but very different lifetime interest (for example: lower rate vs. shorter term). Use the donut as a quick “cost of financing” snapshot.

Affordability: what this calculator does and doesn’t include

This calculator estimates the monthly cost of owning a home using P&I plus optional taxes, insurance, and HOA. It does not include PMI, lender fees, points, closing costs, or utilities. Those items can materially change the first-year cash needed or the true monthly cost.

To evaluate affordability, you may also consider your total monthly obligations, emergency savings, and how stable your income is. A payment that “fits” numerically can still be uncomfortable if it leaves no margin for maintenance, job changes, or unexpected expenses.

If you want a conservative plan, test a slightly higher rate and slightly higher taxes/insurance than your initial estimate. If the payment still works, you’re less likely to be surprised later.

Common scenario comparisons

Down payment vs. rate: Increasing a down payment reduces the loan amount; buying points can reduce the rate. The best option depends on how long you’ll keep the loan and the opportunity cost of cash. Compare the monthly payment change and the total interest change to see which lever is stronger in your case.

15-year vs. 30-year: A 15-year mortgage usually has a higher payment but can cut total interest dramatically. If you can comfortably afford the higher payment, the shorter term may build equity faster. If the payment is tight, a 30-year can provide flexibility — you can still pay extra toward principal when able.

Tax/insurance differences by location: Two identical homes in different counties can have materially different “all-in” monthly costs due to property taxes. When comparing neighborhoods, use realistic tax and insurance estimates — they are often more stable than interest rates in determining your long-term budget.