Mortgage Calculator

The monthly principal and interest payment uses the standard amortization formula: M = P × [r(1+r)^n] / [(1+r)^n − 1], where P is your loan amount (principal), r is your monthly interest rate (annual rate divided by 12), and n is the total number of payments. For example, a $320,000 loan at 7% over 30 years results in a monthly payment of approximately $2,129 for principal and interest alone. Your total monthly payment will be higher when you add property taxes, homeowners insurance, and possibly PMI and HOA fees.

PMI (Private Mortgage Insurance) protects the lender if you default on your loan. You are typically required to pay PMI when your down payment is less than 20% of the home price. The cost usually ranges from 0.5% to 1.5% of the loan amount per year. For a $360,000 loan at 0.5%, that would be about $150 per month. Under the Homeowners Protection Act, PMI must be automatically cancelled when your loan balance reaches 78% of the original home value based on the amortization schedule. You can also request cancellation earlier once you reach 80% equity. Making a larger down payment is the simplest way to avoid PMI entirely.

While 20% is the traditional benchmark that avoids PMI, many first-time homebuyers put down less. Conventional loans can go as low as 3% down, FHA loans require 3.5%, and VA and USDA loans offer 0% down for eligible borrowers. The trade-off is clear: a smaller down payment means a larger loan, higher monthly payments, and potentially PMI. Use the "Down Payment Impact" table on this page to see how different down payment percentages affect your monthly cost. Even going from 10% to 15% down can save you money each month by reducing PMI.

A 30-year mortgage has lower monthly payments but costs significantly more in total interest over the life of the loan. A 15-year mortgage has higher monthly payments but can save you tens of thousands in interest and often comes with a lower interest rate. For example, on a $320,000 loan at 7%, a 30-year term costs about $446,000 in total interest while a 15-year term costs about $193,000 — a savings of over $250,000. Choose the term that fits your budget and financial goals. If you want the flexibility of a lower payment now but plan to make extra payments later, a 30-year term gives you that option.

Mortgage interest rates fluctuate daily based on economic conditions, Federal Reserve policy, and bond market trends. As of 2026, typical fixed-rate mortgage rates range from about 6% to 8% for a 30-year loan, with 15-year rates typically 0.5% to 0.75% lower. Your actual rate depends on your credit score, down payment, loan type, and point history. Borrowers with excellent credit (740+) get the best rates, while those with lower scores may see rates 0.5% to 1% higher. Even a 0.5% difference on a $300,000 loan over 30 years can mean over $27,000 in additional interest. Shop around with multiple lenders and consider paying discount points to lower your rate if you plan to stay in the home long enough to break even.

A fixed-rate mortgage keeps the same interest rate and payment for the entire loan term, offering predictability and protection against rising rates. An adjustable-rate mortgage (ARM) starts with a lower rate for an initial period (usually 5, 7, or 10 years), then adjusts annually based on a market index plus a margin. ARMs can save you money if you plan to sell or refinance before the adjustment period begins. For example, a 5/1 ARM might start at 6% while a 30-year fixed is at 7%, but after 5 years the ARM rate could jump significantly. If you expect to move within a few years, an ARM may make sense. If you plan to stay in the home long-term, a fixed-rate mortgage provides stability.

Property taxes are one of the four components of your monthly mortgage payment (PITI). They vary widely by location — in some states like New Jersey, annual property taxes can exceed $10,000 on a $500,000 home, while in others like Hawaii, they may be under $2,000. Lenders typically require you to escrow (hold in reserve) property tax payments along with your mortgage payment and disburse them to the tax authority twice a year. This ensures taxes are paid on time and protects the lender's collateral. When estimating your monthly payment, always include property taxes based on your local tax rate, which is typically expressed as a percentage of the home value (often 0.5% to 3% annually depending on the location).

Yes, most mortgages allow you to make extra payments toward the principal without penalty. Making additional payments can significantly reduce the total interest you pay and shorten your loan term. For example, adding just $100 per month to a $320,000 loan at 7% over 30 years can save you over $30,000 in interest and pay off the loan nearly 4 years early. Some lenders offer bi-weekly payment options, where you make half the payment every two weeks instead of the full amount monthly — this results in 13 full payments per year instead of 12, naturally accelerating payoff. Always check your loan documents for prepayment penalties, though these are rare in conventional mortgages today.

Your debt-to-income (DTI) ratio is the percentage of your gross monthly income that goes toward debt payments. Lenders use it to assess whether you can afford a mortgage. Generally, your total DTI (including the new mortgage payment) should not exceed 43% for most loan types, though some programs allow up to 50%. For example, if you earn $8,000 per month and already have $1,500 in monthly debts (car payment, student loans, credit cards), your remaining room for a mortgage payment is about $1,940. A lower DTI gives you access to better rates and larger loan amounts. This calculator helps you estimate your monthly payment so you can check your DTI before applying.

Closing costs typically range from 2% to 5% of the home purchase price and include lender fees (origination, application, underwriting), third-party services (appraisal, inspection, credit report), title insurance, recording fees, and prepaid items (property taxes, homeowners insurance, initial escrow). On a $400,000 home, expect to pay approximately $8,000 to $20,000 at closing. Some lenders offer no-closing-cost mortgages, but they compensate by charging a higher interest rate. Factor closing costs into your overall budget when determining how much down payment you can comfortably afford.