How this mortgage calculator works
A fixed-rate mortgage is paid off in equal monthly installments through a process called amortization. Each payment covers the interest due that month plus a slice of the remaining balance (the principal). Early on, most of the payment is interest; later, more of it goes to principal, but the monthly amount stays the same.
The monthly principal & interest payment comes from the standard formula M = P · r · (1+r)n / ((1+r)n − 1). Here P is the loan amount (home price minus down payment), r is the monthly interest rate — the annual rate divided by 12 — and n is the total number of monthly payments, which is the term in years times 12. When the interest rate is zero, the formula simplifies to M = P / n.
This tool then optionally adds the monthly share of property tax (annual ÷ 12), home insurance (annual ÷ 12) and any monthly HOA dues to estimate your total monthly payment, often summarized as PITI plus HOA. Total interest is the sum of all payments minus the loan amount, and total cost is principal plus interest over the full term.
Reference note: results are estimates and use a fixed rate for the whole term. They do not include private mortgage insurance (PMI), discount points, closing costs, escrow shortfalls or rate changes, and currency is shown in US dollars. This is general math, not a loan offer or financial advice.
Frequently asked questions
- How is a mortgage payment calculated?
- The monthly principal and interest uses the amortization formula M = P · r · (1+r)^n / ((1+r)^n − 1), where P is the loan amount, r is the monthly rate (annual rate ÷ 12) and n is the number of payments (years × 12). If the rate is zero, the payment is simply P ÷ n.
- What is PITI?
- PITI stands for Principal, Interest, Taxes and Insurance — the parts that often make up a monthly housing payment. Property tax and insurance are commonly collected into escrow, and HOA dues, when they apply, are usually added on top.
- How does the loan term affect the payment?
- A longer term (e.g. 30 years) spreads the loan over more payments, so each one is lower but you pay more total interest. A shorter term (e.g. 15 years) has higher monthly payments but less total interest, because the balance is paid off faster.
- What is a good down payment?
- A larger down payment reduces the loan and the monthly payment. Twenty percent is a common reference because it can avoid PMI on conventional loans, but many buyers put down less. The right amount depends on your situation — this is general information, not advice.
- Does this calculator include taxes and insurance?
- It can. Enter optional annual property tax, annual home insurance and monthly HOA and the tool adds their monthly share to principal and interest for an estimated total. Leave them blank for principal and interest only.
- Is this an offer, and is it accurate?
- No. This is a neutral math tool, not a loan offer, quote or financial advice. Results are estimates and exclude items like PMI, points and closing costs. Confirm real figures with a qualified professional before deciding.