Mortgage Calculator
Calculate monthly mortgage payments including principal, interest, property tax, and insurance. View a yearly amortization schedule. See also Loan Calculator and Compound Interest Calculator.
How to Calculate Mortgage Payments
A mortgage payment consists of four components, often called PITI: Principal, Interest, Taxes, and Insurance. The principal and interest portion is calculated using the standard amortization formula based on the loan amount (home price minus down payment), interest rate, and loan term. Property taxes and homeowner's insurance are added on top as monthly amounts. Most lenders require a minimum 20% down payment to avoid Private Mortgage Insurance (PMI).
Mortgage Payment Formula
M = P × r × (1 + r)^n / ((1 + r)^n − 1)
Where:
M = Monthly principal & interest payment
P = Loan amount (home price − down payment)
r = Monthly interest rate (annual rate / 12 / 100)
n = Total payments (years × 12)
Example
Home: $300,000, Down: $60,000, Rate: 6.5%, Term: 30 years
Loan = $300,000 − $60,000 = $240,000
r = 6.5 / 12 / 100 = 0.005417
n = 30 × 12 = 360
Monthly P&I = $1,517.09
+ Tax ($300/mo) + Insurance ($100/mo) = $1,917.09 total
Understanding Down Payments
The down payment is the upfront cash you pay toward the home purchase. A larger down payment means a smaller loan, lower monthly payments, and less total interest. Conventional loans typically require 5-20% down. FHA loans allow as low as 3.5%. If your down payment is less than 20%, most lenders require Private Mortgage Insurance (PMI), which adds 0.5-1% of the loan amount annually to your costs. Putting 20% or more down eliminates PMI and often qualifies you for better interest rates.
Mortgage Comparison Table
| Loan Amount | Rate | Term | Monthly P&I | Total Interest |
|---|---|---|---|---|
| $200,000 | 6% | 30 yrs | $1,199.10 | $231,676.38 |
| $200,000 | 6% | 15 yrs | $1,687.71 | $103,788.46 |
| $300,000 | 6.5% | 30 yrs | $1,896.20 | $382,633.19 |
| $300,000 | 6.5% | 15 yrs | $2,613.32 | $170,397.01 |
| $400,000 | 7% | 30 yrs | $2,661.21 | $558,035.97 |
| $500,000 | 7% | 30 yrs | $3,326.51 | $697,544.96 |
Frequently Asked Questions
How much house can I afford?
A common guideline is the 28/36 rule: spend no more than 28% of gross monthly income on housing costs and no more than 36% on total debt. For example, with a $6,000 monthly income, aim for housing costs under $1,680.
Should I choose a 15-year or 30-year mortgage?
A 15-year mortgage has higher monthly payments but much lower total interest — often less than half the interest of a 30-year loan. A 30-year mortgage offers lower monthly payments and more flexibility. Choose based on your budget and financial goals.
What is included in a mortgage payment?
A typical mortgage payment includes PITI: Principal (loan repayment), Interest (borrowing cost), Taxes (property tax), and Insurance (homeowner's insurance). Some payments also include PMI if the down payment was less than 20%.
What is a good mortgage interest rate?
Mortgage rates fluctuate based on economic conditions. Rates depend on your credit score, down payment, loan type, and term. Generally, a rate below the current national average is considered good. Check current rates from multiple lenders to compare.
Solved Examples
Example 1: Monthly payment on a $350,000 mortgage
Solution:
Home price = $400,000, Down payment = $50,000 (12.5%), Loan = $350,000
Rate = 6.75%, Term = 30 years (360 months)
Monthly rate = 6.75% / 12 = 0.5625% = 0.005625
EMI = $350,000 × 0.005625 × (1.005625)^360 / [(1.005625)^360 - 1]
EMI = $2,270.11
Total payment = $2,270.11 × 360 = $817,240
Total interest = $817,240 - $350,000 = $467,240
Answer: Monthly P&I payment = $2,270. You'll pay $467,240 in interest over 30 years.
Example 2: 15-year vs 30-year mortgage comparison
Solution:
Loan = $300,000, Rate = 6.5% (30-yr) vs 5.75% (15-yr)
30-year: EMI = $1,896, Total interest = $382,634
15-year: EMI = $2,494, Total interest = $148,862
Monthly difference = $598 more per month for 15-year
Interest savings = $382,634 - $148,862 = $233,772
Answer: The 15-year mortgage saves $233,772 in interest for $598 more per month.
Example 3: Total monthly cost including PITI
Solution:
Loan P&I = $2,270/month (from Example 1)
Property tax = $5,000/year ÷ 12 = $417/month
Homeowner's insurance = $1,800/year ÷ 12 = $150/month
PMI (since <20% down) = 0.5% × $350,000 / 12 = $146/month
Total PITI = $2,270 + $417 + $150 + $146 = $2,983/month
Answer: True monthly housing cost = $2,983 (not just the $2,270 P&I payment).
Practice Questions
Try these on your own:
- $250,000 mortgage at 7% for 30 years. What is the monthly P&I payment? (Answer: $1,663)
- You can afford $2,000/month P&I at 6.5% for 30 years. Maximum loan amount? (Answer: ≈$316,422)
- $400,000 loan at 6% for 30 years. How much of the first payment goes to interest vs principal? (Answer: Interest = $2,000, Principal = $398)
- Adding $200/month extra to a $300,000 mortgage at 6.5% (30-yr). How many years do you save? (Answer: ≈5.5 years saved)
- 20% down on a $500,000 home at 6.75% for 30 years. Monthly P&I? (Answer: $2,594 on $400,000 loan)
Common Mistakes to Avoid
The biggest mortgage mistake is only comparing monthly payments without looking at total interest cost over the loan's lifetime. A 30-year mortgage on $300,000 at 6.5% costs over $380,000 in interest — more than the home itself. Another critical error is not budgeting for the full PITI (Principal, Interest, Taxes, Insurance) — your actual monthly obligation is 30-50% higher than the P&I alone. Many buyers don't realize that PMI (required below 20% down) adds $100-300/month but can be removed once equity reaches 20%. Skipping mortgage pre-approval before house shopping wastes time and weakens your offer. Also, don't confuse the interest rate with APR — the APR includes closing costs and gives the true borrowing cost. Finally, many homebuyers max out their budget at the bank's approved amount instead of staying within the 28/36 rule (housing ≤28% of gross income, total debt ≤36%).
Key Takeaways
- Monthly payment formula: EMI = P × r × (1+r)^n / [(1+r)^n - 1]. Use monthly rate (annual ÷ 12).
- The 28/36 rule: spend no more than 28% of gross income on housing, 36% on total debt.
- 20% down payment eliminates PMI and gives the best interest rates.
- A 15-year mortgage saves 50-60% in total interest vs a 30-year, but has ~40% higher monthly payments.
- Early payments are mostly interest; extra principal payments early in the loan save the most money.
- Total housing cost (PITI) = Principal + Interest + Property Tax + Insurance (+PMI if applicable).