How this works
A mortgage calculator helps you understand the true cost of buying a home. Enter the purchase price, down payment, interest rate, and loan term to see your monthly payment broken down into principal, interest, tax, and insurance.
The formula behind the calculator is the standard amortising-loan equation: each month you pay a fixed amount, but the *split* between principal and interest changes over time. Early in a 30-year mortgage, almost the entire payment is interest — on a $400,000 loan at 7%, your first month's payment is about $2,661, of which roughly $2,333 is interest and only $328 is principal. By year 20 those numbers nearly invert. This is why paying a little extra in the early years saves disproportionately on lifetime interest: every dollar of extra principal cancels a dollar that would otherwise have compounded against you for decades.
Mortgage products vary by country in ways the calculator can't reflect on its own. In the US, the 30-year fixed-rate is the default — interest is locked for the full term. In the UK, "fixed" usually means a 2–5 year fixed period that then reverts to a variable rate, so the long-term cost depends on what rates do at each remortgage. Continental European mortgages range from short-fix-then-variable (similar to UK) to fully variable, with country-specific quirks (German Bauspardarlehen, Dutch annuïteitenhypotheek, French in fine vs amortissable). When using this calculator outside the US, treat the term length as the duration over which your *current* rate applies, not necessarily the full payoff period.
The formula
M = monthly payment · P = principal · r = monthly rate (annual ÷ 12) · n = number of months
Example calculation
- Subtract down payment: $450,000 − $90,000 = $360,000 principal (P)
- Convert annual rate to monthly: 6.75% ÷ 12 = 0.5625% → r = 0.005625
- Convert term to months: 30 years × 12 = 360 months (n)
- Apply formula → $2,334 principal & interest per month
- Add escrow: $5,400 tax ÷ 12 = $450 + $1,200 insurance ÷ 12 = $100
- Total monthly payment: $2,334 + $450 + $100 = $2,884
Frequently asked questions
What's the difference between APR and interest rate?
The interest rate is the annual cost of the loan expressed as a percentage. APR (Annual Percentage Rate) includes the interest rate plus any lender fees and points, giving you a fuller picture of the loan's true cost. Always compare APRs when shopping for mortgages.
Should I put 20% down?
A 20% down payment lets you avoid Private Mortgage Insurance (PMI), which can add 0.5–1.5% to your annual loan cost. However, putting down less than 20% is often sensible if it keeps your emergency fund intact or allows you to invest the difference at a higher return than your mortgage rate.
How much house can I afford?
A common rule of thumb is that your total housing costs (PITI: principal, interest, taxes, insurance) should not exceed 28% of your gross monthly income. Some lenders stretch this to 31%. Your debt-to-income ratio (all debt payments ÷ gross income) should generally stay below 43%.
Are property taxes included in my monthly payment?
They can be. Most lenders require an escrow account where you pay 1/12th of your annual property tax and insurance each month alongside your mortgage payment. Our calculator includes optional fields for both so you can see the full monthly cost.
What's the difference between a fixed-rate mortgage and an ARM?
A fixed-rate mortgage locks your interest rate for the entire term — your principal-and-interest payment never changes. An adjustable-rate mortgage (ARM) such as a 5/1 or 7/1 starts with a lower fixed rate for the initial 5 or 7 years, then resets annually based on a benchmark index plus a margin. ARMs make sense if you expect to move or refinance before the reset, or if rates are unusually high today and likely to fall. Fixed rates win when you value certainty, plan to stay long-term, or expect rates to rise.
What's the difference between a conforming loan and a jumbo loan?
Conforming loans fall within the lending limits set by Fannie Mae and Freddie Mac — for 2026 that's $806,500 in most US counties, with higher caps in expensive markets like the Bay Area or NYC. Jumbo loans exceed those limits and stay on the lender's books rather than being sold to government-sponsored enterprises. Jumbos typically require credit scores of 700+, down payments of 10–20%, and several months of cash reserves, but their rates are increasingly competitive with conforming loans. This distinction is US-specific — most other countries don't have an equivalent split.
Does paying extra each month really pay off the loan faster?
Yes — and the savings are far larger than most people expect, because of how front-loaded the interest is. On a $400,000 30-year mortgage at 7%, adding just $200/month to the payment cuts the term by roughly 5 years and saves over $115,000 in lifetime interest. Every extra dollar reduces the principal that interest is charged on for every remaining month, so the benefit compounds. Two practical notes: confirm your lender applies extra payments to principal (not to the next month's payment), and check there are no prepayment penalties — most US conventional mortgages have none, but some private and ARM loans do.
When does PMI get removed from my mortgage?
In the US, federal law (the Homeowners Protection Act) requires lenders to automatically cancel Private Mortgage Insurance once your loan-to-value ratio reaches 78% of the original purchase price — meaning you've paid down 22% of principal. You can request earlier cancellation at 80% LTV with a clean payment history. PMI typically costs 0.3–1.5% of the loan amount per year, paid monthly. Note that FHA loans use a different product (MIP) which often stays for the life of the loan unless you refinance into a conventional mortgage. Outside the US, equivalent products vary widely — Canadian CMHC insurance and German Hypothekenversicherung have their own rules.