Mortgage Calculator

How the Mortgage Calculator Works

The Mortgage Calculator estimates your monthly housing payment, total interest cost, and payoff timeline for a fixed-rate, fully amortized home loan. It takes into account your home price, down payment, loan term, interest rate, and optional costs like property taxes, homeowners insurance, HOA fees, and private mortgage insurance (PMI). By separating core principal-and-interest (P&I) from these add-ons, it shows both your true financing cost and your realistic total monthly out-of-pocket amount.

Core Mortgage Payment Formula

For a standard fixed-rate mortgage, the monthly principal & interest payment is calculated using the standard amortization formula:

Payment = P × [ r(1 + r)ⁿ / ((1 + r)ⁿ − 1) ]

where:

• P = loan amount (home price − down payment, optionally plus financed costs)
• r = monthly interest rate (APR ÷ 12)
• n = total number of payments (years × 12)

Each month, interest is charged on the remaining balance using r, and the rest of the payment reduces principal. Over time, your interest portion shrinks and your principal portion grows—this is the defining behavior of an amortizing mortgage.

Escrow: Taxes, Insurance, PMI & HOA

A realistic mortgage payment is often higher than just principal & interest. The calculator lets you optionally include:

• Property taxes: Estimated annual tax divided into monthly escrow.
• Homeowners insurance: Annual premium spread across 12 months.
• PMI: Private Mortgage Insurance for down payments below ~20% LTV, shown as a monthly cost that can be toggled.
• HOA fees: Monthly association dues, if applicable.

These items are added on top of P&I to show your total estimated monthly housing payment, which is what most buyers care about when budgeting.

Start Date & Payoff Timeline

By selecting a start month, the calculator can estimate your projected payoff month based on the chosen term length. This helps you see not just how much you'll pay each month, but how long you'll be paying and when the mortgage will be fully repaid if you follow the schedule.

Extra Payments & Interest Savings

Making extra payments toward principal—whether monthly or occasionally—can:

• Shorten your loan term.
• Reduce total interest paid, sometimes by tens of thousands.
• Build equity faster, giving you more flexibility to refinance or sell.

The calculator is ideal for modeling "What if I add $50, $100, or $200 extra each month?" scenarios so you can see how extra principal payments change your payoff timeline. Always confirm with your lender that extra payments are applied to principal and check for prepayment clauses.

Practical Use Cases

Use this Mortgage Calculator to:

• Estimate an affordable home price based on your target monthly payment.
• Compare different loan terms (15 vs 30 years) or interest rates side by side.
• Understand how down payment size affects PMI, equity, and long-term cost.
• Break down the difference between P&I and full payment with taxes and insurance.

Scope, Assumptions & Limitations

To keep results clear and consistent, this tool:

• Models fixed-rate, fully amortized mortgages only.
• Uses level monthly payments with standard monthly compounding.
• Treats taxes, insurance, PMI, and HOA as user-estimated inputs; actual amounts vary by lender and location.
• Does not simulate ARMs, interest-only periods, balloon payments, buy-downs, or complex closing cost structures.
• Provides educational estimates, not a loan offer or personalized financial advice.

Educational Insight

Your mortgage is likely the largest financial commitment you'll make. By breaking payments into principal, interest, and escrow items—and showing how term length, rate, and down payment change the numbers—this Mortgage Calculator helps you move beyond guesswork. It's designed to make long-term costs transparent so you can compare options confidently and choose a mortgage that aligns with your budget and goals.