Mortgage Calculator - Calculate Your Home Loan Payment

What is a Mortgage Calculator?

A mortgage calculator is a free online tool that helps you estimate your monthly home loan payment based on the home price, down payment, interest rate, loan term, property taxes, homeowners insurance, and HOA fees. Whether you're a first-time homebuyer, refinancing your current mortgage, or exploring your home affordability, our mortgage calculator provides accurate payment estimates including principal, interest, taxes, and insurance (PITI) to help you budget and plan for homeownership.

How to Use the Mortgage Calculator

Calculating your mortgage payment is simple:

1. Enter Home Price: Input the purchase price or current home value
2. Add Down Payment: Enter your down payment amount or percentage (typically 3-20%)
3. Input Interest Rate: Enter the annual interest rate (APR) offered by your lender
4. Select Loan Term: Choose 15-year or 30-year mortgage (most common)
5. Add Property Taxes: Enter annual property tax amount (check local rates)
6. Include Insurance: Add annual homeowners insurance premium
7. Add HOA Fees (if applicable): Include monthly homeowners association fees
8. Add PMI (if applicable): Include private mortgage insurance for <20% down
9. Calculate: Click to see your complete monthly payment breakdown
10. View Amortization: Review the payment schedule over the loan's lifetime

Understanding Mortgage Terms

Principal

The amount borrowed to purchase the home, excluding interest and other costs. This is the home price minus your down payment.

Interest Rate

The cost of borrowing money from the lender, expressed as an annual percentage. Your rate depends on credit score, down payment, loan type, and market conditions.

Loan Term

The length of time to repay the mortgage. Common terms are 15 years (higher payments, less interest) or 30 years (lower payments, more interest).

Down Payment

The upfront payment you make toward the home purchase. Larger down payments (20%+) avoid PMI and often secure better interest rates.

PITI

Principal, Interest, Taxes, and Insurance—the four main components of your monthly mortgage payment. Lenders use PITI to qualify borrowers.

PMI (Private Mortgage Insurance)

Required insurance when you put down less than 20%. Protects the lender if you default. Typically 0.5-1.5% of loan amount annually, added to monthly payment.

Escrow Account

A lender-held account that collects monthly portions of property taxes and insurance, then pays these bills on your behalf when due.

Amortization

The gradual payoff of your loan through scheduled payments. Early payments are mostly interest; later payments are mostly principal.

APR (Annual Percentage Rate)

Includes the interest rate plus lender fees and closing costs, representing the true cost of the mortgage. Always compare APRs when shopping.

Fixed vs. Adjustable Rate

Fixed-rate mortgages maintain the same interest rate for the entire term. Adjustable-rate mortgages (ARMs) have rates that change after an initial fixed period.

Types of Mortgages

Conventional Loans

Down Payment: 3-20%
Credit Score: 620+ typically
Loan Limits: Up to $766,550 (2024 conforming limit, higher in expensive areas)
Best For: Borrowers with good credit and stable income

FHA Loans

Down Payment: 3.5% minimum
Credit Score: 580+ (500+ with 10% down)
Loan Limits: Varies by county
Best For: First-time buyers, lower credit scores, smaller down payments

VA Loans

Down Payment: $0 possible
Credit Score: No official minimum (lenders typically want 620+)
Loan Limits: No limit for qualified veterans
Best For: Active military, veterans, and eligible surviving spouses

USDA Loans

Down Payment: $0 in eligible rural areas
Credit Score: 640+ typically
Loan Limits: Based on income and location
Best For: Rural and suburban homebuyers with moderate income

Jumbo Loans

Down Payment: 10-20%+ typically
Credit Score: 700+ usually required
Loan Limits: Above conforming limits ($766,550+)
Best For: High-value properties in expensive markets

Fixed-Rate Mortgages

Terms: 10, 15, 20, or 30 years
Rate: Never changes
Payment: Consistent throughout loan
Best For: Long-term homeowners wanting payment stability

Adjustable-Rate Mortgages (ARMs)

Terms: 3/1, 5/1, 7/1, 10/1 ARM (fixed years/adjustment frequency)
Rate: Changes after initial period
Payment: Can increase or decrease
Best For: Short-term ownership, expecting income growth, falling rate environment

Why Use a Mortgage Calculator?

Home Affordability

Determine how much house you can realistically afford based on your income, debts, and down payment before starting your home search.

Budget Planning

Know your complete monthly housing payment including taxes, insurance, and HOA fees—not just principal and interest.

Down Payment Strategy

Compare scenarios with different down payment amounts to see how each affects your monthly payment and PMI costs.

Loan Comparison

Evaluate 15-year vs. 30-year mortgages, or compare different interest rates to find the most cost-effective option.

Refinance Analysis

Calculate potential savings from refinancing at a lower rate or shorter term to decide if refinancing makes financial sense.

Total Cost Awareness

See exactly how much you'll pay in interest over the loan's lifetime—often shocking compared to the purchase price.

Negotiation Power

Walk into lender meetings and home showings knowing your numbers, making you a more informed and confident buyer.

How Mortgage Payments Are Calculated

Monthly Payment Formula: M = P × [r(1 + r)^n] / [(1 + r)^n - 1]

Where:

• M = Monthly principal and interest payment
• P = Principal loan amount
• r = Monthly interest rate (annual rate ÷ 12)
• n = Total number of monthly payments

Frequently Asked Questions (FAQs)

How much house can I afford?

A common rule: your monthly housing payment (PITI) should not exceed 28% of your gross monthly income. Total debt payments (including housing) shouldn't exceed 36-43% of income. For example, with $6,000/month income, aim for housing under $1,680/month.

What credit score do I need for a mortgage?

Minimum scores vary by loan type: Conventional (620+), FHA (580+), VA (typically 620+ though no official minimum), USDA (640+). Higher scores (740+) qualify for the best interest rates. Even 20 points can affect your rate significantly.

How much should I put down?

While 20% down avoids PMI and gets better rates, many buyers put down less: FHA requires just 3.5%, conventional loans accept 3%, VA and USDA offer $0 down. Larger down payments reduce monthly costs but deplete savings needed for closing costs, moving, and emergencies.

What is PMI and how do I avoid it?

Private Mortgage Insurance protects lenders when you put down less than 20%. It costs 0.5-1.5% of the loan amount annually. Avoid it by: putting 20% down, using a piggyback loan (80-10-10), choosing a VA loan, or selecting lender-paid PMI with a slightly higher rate.

Should I choose a 15-year or 30-year mortgage?

15-year mortgages have higher monthly payments but lower rates and dramatically less total interest. 30-year mortgages offer lower payments and more flexibility. Choose 15-year if you can afford higher payments and want to build equity faster and save on interest.

What interest rate can I expect?

Rates vary by credit score, down payment, loan type, and market conditions. As of 2025, borrowers with excellent credit (740+) and 20% down might see rates around 6-7%, while those with fair credit (620-679) could face 7-9%+. Check current rates with multiple lenders.

How much are closing costs?

Closing costs typically run 2-5% of the loan amount ($5,000-$15,000 on a $300,000 loan). Includes appraisal, title insurance, attorney fees, origination fees, and prepaid items. Some costs are negotiable; shop around and compare loan estimates.

Can I pay off my mortgage early?

Most mortgages allow prepayment without penalties, but verify this before signing. Paying extra toward principal saves substantial interest and shortens your loan term. Even an extra $100-200/month makes a significant difference over time.

What is an ARM and should I consider one?

An Adjustable-Rate Mortgage starts with a fixed rate (3, 5, 7, or 10 years), then adjusts periodically. ARMs offer lower initial rates but carry risk if rates rise. Consider if you plan to move or refinance before adjustment, or if you expect rates to fall.

How do property taxes affect my payment?

Property taxes vary widely by location (0.3-2.5% of home value annually). In high-tax states like New Jersey or Illinois, taxes can equal or exceed your principal and interest payment. Always research local tax rates before buying.

What is included in homeowners insurance?

Standard policies cover dwelling, personal property, liability, and additional living expenses. Costs vary by location, home value, and coverage level ($1,000-$3,000+ annually). Required by all mortgage lenders to protect their investment.

Should I refinance my mortgage?

Consider refinancing if rates drop 0.75-1%+ below your current rate, your credit has improved significantly, you want to shorten your term, or you need to eliminate PMI. Calculate break-even point: divide closing costs by monthly savings.

What is escrow and is it required?

Escrow accounts hold funds for property taxes and insurance, which the lender pays on your behalf. Usually required with less than 20% down. Pros: Budgets these costs monthly, ensures timely payment. Cons: Money tied up, no interest earned.

How does my debt-to-income ratio affect approval?

Lenders calculate DTI by dividing monthly debt payments by gross monthly income. Most want to see: Front-end DTI (housing only) under 28%, Back-end DTI (all debts) under 36-43%. Lower DTI increases approval odds and may secure better rates.

Can I buy a house with student loan debt?

Yes, but student loans affect your debt-to-income ratio. Lenders count your monthly student loan payment (or 0.5-1% of balance if on deferment). Pay down high-interest debt first, and consider income-driven repayment plans to lower monthly obligations.

Down Payment Options and Strategies

20% Down Payment (Traditional)

Monthly Payment Impact: Lower
PMI: None
Interest Rate: Best available
Pros: No PMI, strong equity position, better rates
Cons: Requires substantial savings
Best For: Buyers with savings who want lowest monthly costs

10-19% Down Payment

Monthly Payment Impact: Moderate
PMI: Required
Interest Rate: Competitive
Pros: Balances savings preservation with lower PMI
Cons: Still requires significant cash
Best For: Buyers balancing savings and monthly costs

5-9% Down Payment

Monthly Payment Impact: Higher
PMI: Required (higher rate)
Interest Rate: Slightly elevated
Pros: Achievable for more buyers
Cons: Higher monthly costs, slower equity building
Best For: Buyers ready to purchase but with limited savings

3-3.5% Down Payment (FHA/Conventional)

Monthly Payment Impact: Highest
PMI: Required (FHA has MIP for loan life)
Interest Rate: Standard to slightly elevated
Pros: Accessible for first-time buyers
Cons: Maximum PMI costs, minimal equity
Best For: First-time buyers, limited savings

$0 Down Payment (VA/USDA)

Monthly Payment Impact: Highest (financing 100%)
PMI: None (VA), none (USDA but has guarantee fee)
Interest Rate: Competitive
Pros: No savings required, preserve cash
Cons: Immediate negative equity if market drops
Best For: Eligible veterans, rural buyers

Tips for Getting the Best Mortgage

1. Improve Your Credit Score First

Even 20 points can affect your rate. Pay bills on time, reduce credit card balances below 30%, dispute errors, and avoid new credit applications before applying.

2. Shop Multiple Lenders

Compare at least 3-5 lenders including banks, credit unions, and online lenders. Rates can vary by 0.5%+, potentially saving tens of thousands over the loan term.

3. Get Pre-Approved, Not Just Pre-Qualified

Pre-approval involves credit and income verification, making your offer stronger. Pre-qualification is just an estimate. Sellers prefer pre-approved buyers.

4. Save for a Larger Down Payment

Even 5% more down can eliminate PMI or reduce your rate. If possible, delay buying to save more—the savings often exceed rent costs.

5. Consider Points

Paying points (1% of loan amount) can reduce your interest rate by ~0.25% per point. Calculate break-even: if you'll stay 5+ years, points may save money.

6. Time Your Rate Lock Carefully

Rate locks protect you from increases but expire (30-60 days). Lock when rates are favorable and your closing is near. Extended locks may cost extra.

7. Negotiate Closing Costs

Many fees are negotiable. Compare loan estimates line-by-line and ask lenders to match competitors' fees or reduce origination charges.

8. Consider Shorter Terms

If you can afford higher payments, 15-20 year mortgages offer significantly lower rates and massive interest savings. Even paying extra on a 30-year mortgage helps.

9. Avoid Buying Too Much House

Just because you qualify for $500,000 doesn't mean you should borrow that much. Leave room in your budget for maintenance, repairs, and lifestyle expenses.

10. Review Your Loan Estimate Carefully

Within 3 days of applying, you'll receive a Loan Estimate. Compare APR (not just rate), closing costs, and monthly payment. Check for errors before proceeding.

15-Year vs. 30-Year Mortgage Comparison

$300,000 Loan at 6.5% Interest

Mortgage Rate Shopping Strategy

Step 1: Check Your Credit (3-6 Months Before)

Review all three bureaus. Dispute errors. Pay down debts. Avoid new credit.

Step 2: Research Current Rates (2-3 Months Before)

Monitor rate trends. Understand factors affecting rates. Set realistic expectations.

Step 3: Get Pre-Qualified (2 Months Before)

Soft credit pull from multiple lenders. Compare preliminary offers. Identify best candidates.

Step 4: Apply for Pre-Approval (1-2 Months Before)

Apply to top 3-5 lenders within 14-45 days (counts as one credit inquiry). Provide all documentation.

Step 5: Compare Loan Estimates

Receive Loan Estimates within 3 days. Compare APR, rates, fees, and terms line-by-line.

Step 6: Negotiate

Use competing offers as leverage. Ask lenders to match or beat best terms.

Step 7: Lock Your Rate

Lock when rate is favorable and closing is near. Confirm lock terms in writing.

Step 8: Close on Time

Don't make financial changes. Respond quickly to lender requests. Close as scheduled.

Hidden Homeownership Costs

Beyond your mortgage payment, budget for:

Monthly Costs

• Utilities: $200-400 (electric, gas, water, sewer, trash)
• HOA Fees: $50-500+ if applicable
• Pest Control: $30-60 (in some regions)
• Maintenance: 1% of home value annually (save monthly)

Annual Costs

• Property Taxes: 0.3-2.5% of home value
• Homeowners Insurance: $1,000-3,000+
• Umbrella Insurance: $200-500 (optional but recommended)
• Landscaping: $500-2,000+

Periodic Costs

• HVAC Maintenance: $100-200 annually
• Appliance Replacement: $3,000-8,000 every 10-15 years
• Roof Replacement: $5,000-15,000 every 20-30 years
• Major Repairs: Emergency fund recommended

Total Hidden Costs: Often $500-1,000+ monthly beyond mortgage

Refinancing: When Does It Make Sense?