Mortgage Calculator
Enter a home price, a down payment, an interest rate and a term to get the monthly payment on a fixed rate loan, the total interest over the life of the loan, and a month by month amortisation schedule. Annual property tax and insurance are optional and are added on top.
Disclaimer: This is an estimate for educational purposes. Actual mortgage payments, interest rates, and fees may differ. Consult with a lender for accurate information.
What the monthly payment is actually made of
The headline number this calculator produces is principal and interest, often written as P&I. That is the amount the lender needs each month to clear the loan balance by the end of the term at the agreed rate. It is fixed for the whole term on a fixed rate loan, and it is the only part of the payment that the amortisation formula controls.
The two optional fields, annual property tax and annual home insurance, are handled separately and much more simply. The calculator divides each annual figure by twelve and adds the result to the P&I payment to produce the second, larger number labelled total monthly payment. There is no interest, no escalation and no escrow logic applied to those two amounts. If you enter 3,600 of annual tax and 1,200 of annual insurance, the calculator adds exactly 300 and exactly 100 per month, every month, for the whole term.
The loan amount itself is simply the home price minus the down payment. If you type a down payment amount, the percentage field fills in automatically, and if you type a percentage the amount fills in. Either way, the figure that goes into the formula is the cash difference between price and deposit.
The amortisation formula
A fixed rate mortgage is a level payment annuity. The payment is the number that makes the present value of every future instalment equal the amount borrowed:
- M is the monthly principal and interest payment, the number you are solving for.
- P is the principal, meaning the home price minus the down payment.
- i is the periodic interest rate. This calculator takes your annual rate, divides it by 100 to turn a percentage into a decimal, then divides by 12. A 6.5 percent annual rate becomes 0.00541667 per month.
- n is the total number of monthly payments, which is the term in years multiplied by 12. A 30 year loan gives 360.
One special case is worth knowing about, because the formula breaks at it. If the interest rate is zero, the denominator becomes zero and the expression is undefined. The calculator detects a rate of zero and falls back to the obvious answer, principal divided by the number of payments. A 240,000 interest free loan over 360 months is 666.67 per month.
A worked example you can follow
Take a home priced at 300,000 with a 20 percent down payment of 60,000, a 6.5 percent annual rate and a 30 year term. The principal is 300,000 minus 60,000, so P is 240,000. The monthly rate i is 6.5 divided by 100 divided by 12, which is 0.005416667. The payment count n is 360.
Numerator = 240,000 × (0.005416667 × 6.991798) = 240,000 × 0.03787224 = 9,089.34
Denominator = 6.991798 − 1 = 5.991798
M = 9,089.34 ÷ 5.991798 = 1,516.96
So the payment is 1,516.96 per month. Across all 360 payments the total paid is 546,106.77. Subtract the 240,000 that was actually borrowed and the total interest is 306,106.77. On this loan the interest alone is more than the original principal, which is the single most useful thing a mortgage calculator can show you. Add the optional 3,600 of tax and 1,200 of insurance and the monthly outlay becomes 1,916.96.
Why early payments are almost all interest
Every month, the lender charges interest on whatever balance is still outstanding. Whatever is left of your fixed payment after that interest is taken goes to reducing the balance. In month one of the example above, the interest is 240,000 multiplied by 0.005416667, which is exactly 1,300.00. That leaves only 216.96 of the 1,516.96 payment to reduce the debt. Over the whole first year you pay 18,203.56 in instalments, of which 15,521.02 is interest and just 2,682.54 comes off the balance.
Because the balance falls, the interest charge falls too, and the principal share grows every single month. The point where the split crosses over is later than most people expect. On this loan, payment 233 is the first one where principal beats interest: 759.76 of principal against 757.20 of interest. That is more than 19 years into a 30 year loan. By the final payment, month 360, the interest component is 8.17 and 1,508.79 goes to principal.
| Payment | Interest | Principal | Balance after |
|---|---|---|---|
| 1 | 1,300.00 | 216.96 | 239,783.04 |
| 60 (year 5) | 1,218.56 | 298.40 | 224,666.35 |
| 120 (year 10) | 1,104.32 | 412.64 | 203,462.70 |
| 180 (year 15) | 946.36 | 570.60 | 174,141.94 |
| 233 (crossover) | 757.20 | 759.76 | 139,031.49 |
| 360 (final) | 8.17 | 1,508.79 | 0.00 |
Notice the balance at year 10. After a decade of paying, 203,462.70 of the original 240,000 is still owed. The calculator prints this schedule for you if you open the amortisation table under the result, showing the first 60 months.
How the term changes the total interest
Shortening the term raises the monthly payment but cuts the total interest hard, because the balance spends far less time accruing. Here is the same 240,000 at 6.5 percent over three common terms.
| Term | Monthly P&I | Total paid | Total interest |
|---|---|---|---|
| 15 years | 2,090.66 | 376,318.38 | 136,318.38 |
| 20 years | 1,789.38 | 429,450.13 | 189,450.13 |
| 30 years | 1,516.96 | 546,106.77 | 306,106.77 |
Going from 30 years to 15 costs an extra 573.70 a month, but saves 169,788.39 in interest. That is the real trade being made, and it is worth running both numbers before signing anything.
How the rate changes the payment
Rate movements that sound small are not small. Each row below is the same 240,000 over 30 years.
| Annual rate | Monthly P&I | Total interest |
|---|---|---|
| 5.5% | 1,362.69 | 250,569.70 |
| 6.0% | 1,438.92 | 278,011.65 |
| 6.5% | 1,516.96 | 306,106.77 |
| 7.0% | 1,596.73 | 334,821.36 |
| 7.5% | 1,678.11 | 364,121.34 |
Moving from 6.5 to 7.0 percent adds 79.77 to the monthly payment and 28,714.59 to the interest paid across the term. Shopping two or three lenders is usually worth more than any amount of budgeting elsewhere.
Down payments and PMI
A bigger deposit helps twice: it lowers the amount borrowed, and it can remove mortgage insurance. Here is a 300,000 home at 6.5 percent over 30 years at four deposit levels.
| Down payment | Loan amount | Monthly P&I | Total interest |
|---|---|---|---|
| 5% (15,000) | 285,000 | 1,801.39 | 363,501.79 |
| 10% (30,000) | 270,000 | 1,706.58 | 344,370.12 |
| 20% (60,000) | 240,000 | 1,516.96 | 306,106.77 |
| 30% (90,000) | 210,000 | 1,327.34 | 267,843.43 |
Private mortgage insurance, usually shortened to PMI, is a policy that protects the lender, not you, if you stop paying. In the United States it is typically required on conventional loans when the down payment is under 20 percent, and it commonly costs somewhere between 0.5 and 1.0 percent of the loan balance per year. On the 285,000 loan in the first row that is roughly 119 to 238 per month on top of everything else. It normally falls away once the balance drops far enough relative to the home value. Outside the United States the equivalent product goes by other names and other rules.
This calculator does not model PMI. If you are putting down less than 20 percent, estimate the annual PMI cost yourself and add it to the annual home insurance field to get a more honest monthly figure.
What this calculator does not include
- Closing costs and origination fees. These are typically a few percent of the price, paid up front, and none of it appears here.
- PMI or any mortgage insurance, as described above.
- HOA fees, levies and body corporate charges. These can be hundreds a month and are not part of the loan at all.
- Escrow changes. Property tax and insurance are treated as a constant twelfth of the annual figure you type. In reality both are reassessed and they usually rise over 30 years.
- Adjustable rates. The maths assumes one fixed rate for the whole term. An ARM, a variable rate loan or a rate linked to a central bank prime rate will diverge from these numbers as soon as it resets.
- Extra payments, offset accounts and payment holidays. The schedule assumes you pay exactly the calculated amount, every month, on time.
- Maintenance. Not a loan cost, but a real one, and it is a common reason a technically affordable payment turns out not to be.
Frequently asked questions
Why is my lender quote higher than this number?
Almost always because the quote is a full PITI figure plus mortgage insurance and sometimes HOA. Compare like with like: check the lender quote against the principal and interest number here first, then add the other components one at a time.
Does paying extra each month actually help much?
Yes, disproportionately so in the early years, because any extra amount goes entirely against principal and removes all the future interest that balance would have generated. This calculator does not model extra payments, so treat that as a separate calculation.
Is a 15 year loan always better than a 30?
It costs less in total interest, as the table above shows, but it commits you to a much larger fixed payment. A 30 year loan with voluntary extra payments gives you most of the saving with the option to stop in a bad month. Which is better depends on how stable your income is.
What interest rate should I put in?
Use a quoted rate from an actual lender if you have one. If you are only exploring, use the current average for your country and loan type, and then run the numbers again half a point either side so you know how sensitive your budget is.
Why does the total interest look so enormous?
Because interest is charged on the outstanding balance for 360 consecutive months and the balance falls slowly at first. The number is correct. It is also the strongest argument for a shorter term, a bigger deposit or a lower rate.
Can I use this for a car loan or a personal loan?
The formula is identical for any level payment instalment loan, so yes, as long as you leave the property tax and insurance fields blank and the loan really is fixed rate with equal monthly payments.
A note on accuracy
Every figure on this page is an estimate produced by the standard amortisation formula. It is not financial advice, it is not an offer of credit, and it does not account for your specific lender, fees, tax position or local regulations. Use it to compare scenarios and to sanity check what you are told, then get a written quote from a lender before making a decision.