Home Price ($)
Down Payment (%)
Annual Interest Rate (%)
Loan Term
Annual Property Tax ($)
Annual Insurance ($)
Full breakdown with amortisation (click to copy)
Decision Support
Check total interest against home price
If Total Interest is a large fraction of the home price, a larger down payment or a shorter term would meaningfully reduce your total cost — compare a few scenarios before committing.
This shows what you can borrow, not what you should
A lender may approve a larger loan than this payment feels comfortable at — size your down payment and term to a monthly payment you're confident carrying long-term, not just the maximum available.
Property tax and insurance change by location
These figures vary significantly by area — use your actual local estimates rather than a rough guess for an accurate total monthly payment.
➜ Next step: Not sure how much home you can actually afford? Use the Mortgage Affordability Calculator to work backward from your income instead.
How to Use the Mortgage Calculator
- Enter home price — the total purchase price of the property.
- Enter down payment — the upfront amount you will pay. Most mortgages require 10–20%. Enter as amount or percentage.
- Set loan term — typically 15 or 30 years. 15-year mortgages have higher monthly payments but significantly lower total interest.
- Enter interest rate — the annual interest rate on your mortgage. Check current rates from multiple lenders before using an estimate.
- Add property costs — include property tax, homeowner's insurance, and HOA fees for a complete monthly housing cost picture.
- Review amortisation — see how your balance reduces over time and the total interest paid over the full loan term.
🏠 The 28% rule: Your monthly mortgage payment (principal + interest + taxes + insurance) should not exceed 28% of your gross monthly income. Lenders typically enforce this as a qualifying criterion. Use this calculator to verify affordability before making offers on properties.
Understanding Mortgages
🏦 How Mortgages Work
A mortgage is a secured loan where the property serves as collateral. If payments stop, the lender can foreclose and sell the property to recover the debt. This security allows mortgages to have lower interest rates than unsecured loans.
📊 Fixed vs Adjustable Rate
Fixed rate: same interest rate for the entire loan term. Predictable payments. Adjustable rate (ARM): starts lower but adjusts periodically based on market rates. ARMs suit buyers planning to sell before the first adjustment period.
💰 Down Payment Impact
Higher down payment = lower loan amount + lower monthly payment + better interest rate + no PMI (if ≥20%). PMI (Private Mortgage Insurance) adds 0.5–1.5% of loan value annually — $100–$300/month on a $200K loan — until you reach 20% equity.
⚡ Points
Discount points: upfront fees (1 point = 1% of loan) paid to reduce interest rate. Paying 1 point typically lowers rate by 0.25%. Calculate break-even: point cost ÷ monthly savings = months to break even. Worthwhile if you keep the loan longer than break-even period.
🔄 Refinancing
Replacing existing mortgage with a new one at a lower rate or different term. Worthwhile if new rate is at least 0.75–1% lower than current rate and you plan to stay in the home long enough to recoup refinancing costs (typically $2,000–$5,000).
📅 Amortisation
Early mortgage payments are mostly interest with little principal reduction. At 6% on $300K: month 1 payment = $1,799, of which $1,500 is interest and $299 is principal. By year 20, the split reverses — most payment reduces principal.
Mortgage Strategy and Savings
The 15-year vs 30-year decision
A 30-year mortgage on $300,000 at 6.5%: $1,896/month, $382,560 total interest. A 15-year mortgage at 6.0%: $2,532/month, $155,760 total interest. The 15-year saves $226,800 in interest but costs $636/month more. If the $636 extra monthly payment would cause financial strain, the 30-year with voluntary extra payments is a better strategy — same payoff timeline with the flexibility to revert to lower payments if needed.
Extra payments — the most powerful mortgage tool
Making one extra mortgage payment per year (month 13) reduces a 30-year mortgage by approximately 4–5 years and saves tens of thousands in interest. Dividing your monthly payment by 12 and adding that amount to each monthly payment achieves the same result. This is the most cost-effective mortgage acceleration strategy — no refinancing fees, no commitment, maximum flexibility.
Building equity strategy
Home equity = property value minus outstanding mortgage balance. Equity builds through: mortgage payments (principal portion), property value appreciation, and home improvements that add value. Equity can be accessed through home equity loans or lines of credit for large expenses at mortgage rates — significantly cheaper than personal loans or credit cards.
🏠 Total cost of homeownership: Mortgage payment is only one cost. Add: property tax (1–2% of value annually), homeowner's insurance (0.5–1%), maintenance (1% of value annually), HOA fees (if applicable), and utilities. Total monthly housing cost often runs 1.5–2× the mortgage payment alone. Calculate this full cost before buying.
Mortgage Formula
Monthly Payment = P × r × (1 + r)ⁿ ÷ ((1 + r)ⁿ − 1), where P is the loan principal (home price minus down payment), r is the monthly interest rate, and n is the total number of monthly payments.
Worked example
$300,000 home, 20% down ($60,000), 6.5% annual rate, 30-year term: Principal = $240,000. Monthly rate = 6.5 ÷ 12 ÷ 100 = 0.005417. Monthly Payment ≈ $1,516.96, Total Interest over 30 years ≈ $306,107.
Assumption: uses a fixed rate for the full term — an adjustable-rate mortgage's payment will change when the rate resets, and this calculator doesn't model that.
Common Mistakes
Forgetting property tax and insurance
The principal-and-interest figure alone understates your real monthly cost — always include property tax and insurance for an accurate total.
Sizing the loan to what's approved, not what's comfortable
A lender's maximum approval isn't a recommendation — leave room in your budget for maintenance, emergencies, and other financial goals.
Ignoring the total interest over the full term
A lower monthly payment from a longer term usually means significantly more total interest — check both figures, not just the monthly number.
Entering a down payment outside 0-100%
A down payment can't exceed the home price or be negative — this calculator validates that range, but always double-check your own inputs make sense.
Frequently Asked Questions
What is a mortgage?
A mortgage is a loan secured by real property. The lender provides funds to purchase a home, and the borrower repays with interest over a set term (typically 15–30 years). The property serves as collateral — if payments stop, the lender can foreclose.
What is included in a monthly mortgage payment?
A full monthly payment (PITI) includes: Principal (reduces your loan balance), Interest (cost of borrowing), Tax (property tax escrowed monthly), and Insurance (homeowner's insurance). This calculator includes all four components.
What is amortisation?
Amortisation is the process of paying off a loan through regular payments. Early payments are mostly interest; later payments are mostly principal. This calculator shows the first and last months of your amortisation schedule so you can see how the balance changes over time.
Should I choose 15 or 30 years?
A 15-year mortgage has higher monthly payments but significantly less total interest — often 40–50% less. A 30-year has lower payments but costs more overall. The 30-year is popular because lower payments provide more monthly flexibility. Compare both in this calculator.
What is PMI?
Private Mortgage Insurance (PMI) is required when your down payment is less than 20%. It protects the lender if you default. PMI typically costs 0.5–1.5% of the loan amount annually. It can be cancelled once you have 20% equity in the home.
References
🏛️ Consumer Financial Protection Bureau
U.S. mortgage and loan disclosure standards — consumerfinance.gov
📄 Your lender's loan estimate
For exact rate, fees, and PMI cost, use the official Loan Estimate document from your lender rather than an approximation.
Last updated: 15 July 2026 · Comparing more than one loan offer? See them side by side with the Loan EMI Comparison Calculator.