A mortgage payment is calculated using the loan amount, interest rate, and loan term. Each monthly payment covers both principal (paying down the loan) and interest (the cost of borrowing). Early in the loan, most of your payment goes to interest. Over time, more goes toward principal — this is shown in the amortization schedule. Our calculator also factors in property taxes, homeowners insurance, and PMI to give you the true total monthly cost of homeownership.
Your monthly payment is calculated using the standard amortization formula: M = P[r(1+r)^n] / [(1+r)^n – 1], where P is the loan principal, r is the monthly interest rate, and n is the total number of payments. This produces a fixed payment that gradually shifts from mostly interest to mostly principal over the life of the loan.
Private Mortgage Insurance (PMI) is required when your down payment is less than 20% of the home price. PMI typically costs 0.5%–1% of the loan amount per year and is added to your monthly payment. Once you reach 20% equity, you can request PMI removal.
A 15-year mortgage has higher monthly payments but much lower total interest cost. A 30-year mortgage offers lower monthly payments and more financial flexibility. Use the calculator to compare both options with your specific numbers.
Extra payments go directly toward principal, reducing your loan balance faster. This shortens your loan term and can save tens of thousands in interest. Even small extra payments of $100–$200/month can shave years off a 30-year mortgage.
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