How to use the mortgage calculator
- Home price — the purchase price you are considering.
- Down payment — the cash you put in up front. The percentage is shown next to the label; 20% or more avoids PMI on most conventional loans.
- Interest rate — the annual rate from your lender quote (not the APR, which also includes fees).
- Loan term — 30 years is the most common in the US; 15-year loans save interest.
- Taxes, insurance & fees — property tax as a % of the home's value per year, your annual insurance premium, the PMI rate and any monthly HOA dues.
Results update instantly. The donut shows where each monthly dollar goes, and the schedule shows how the balance falls year by year.
Mortgage payment formula explained
The principal-and-interest part of the payment uses the standard amortization formula:
M = P × r(1 + r)n ÷ [(1 + r)n − 1]
- M = monthly principal and interest payment
- P = loan amount (home price minus down payment)
- r = monthly interest rate (annual rate ÷ 12)
- n = number of monthly payments (years × 12)
Property tax is the annual rate × home price ÷ 12, insurance is the annual premium ÷ 12, and PMI is the annual PMI rate × the original loan amount ÷ 12. PMI is charged until the scheduled balance falls to 78% of the purchase price.
Worked example
A $400,000 home with 20% down ($80,000) leaves a $320,000 loan. At 6.5% for 30 years, principal and interest come to about $2,023 per month. Add 1.1% property tax ($367/month) and $1,500/year insurance ($125/month) and the full payment is roughly $2,514. Over 30 years you would pay around $408,000 in interest — more than the original loan.
Ways to lower your mortgage payment
- Put more down. Reaching 20% removes PMI and shrinks the loan.
- Improve your credit score before applying — even 0.25% lower interest saves thousands.
- Compare lenders. Rates and fees vary; get at least three Loan Estimates.
- Shop insurance and appeal your property tax assessment if it looks high.
- Pay extra principal when you can — try our loan amortization calculator to see the savings.