MORTGAGE

Mortgage Calculator

This mortgage calculator shows your full monthly mortgage payment, including property tax and home insurance, plus the total interest you will pay over the life of the loan. Seeing the whole cost in one place makes it easier to compare homes and loan terms honestly, instead of judging a home by the headline price alone.

How to use this mortgage calculator

1. Enter the home price. Use the listing price of the home you are looking at, or the price you expect to offer.
2. Enter your down payment in dollars. If you are not sure yet, try 20% of the price first, then compare with a smaller amount to see how the payment changes.
3. Add the interest rate and loan term. Your lender quote or pre-approval letter shows both. If you are still shopping, 30 years and 15 years are the two terms worth comparing.
4. Enter the annual property tax rate for the area. You can find it on the property listing, the county tax website, or by asking the selling agent. The US average is around 1.1% of the home value per year.
5. Add the yearly home insurance cost and any monthly HOA fees. A rough insurance estimate is $2,000 to $2,500 a year for a mid-priced home if you do not have a quote yet.
6. Press Calculate. You will see the loan amount, the monthly principal and interest, the monthly tax and insurance, your full monthly payment, and the total interest over the whole term.

A worked example

Say you buy a home for $400,000 and put 20% down. That is an $80,000 down payment and a $320,000 loan.

At 6.5% interest over 30 years, the monthly principal and interest comes to $2,022.62. Property tax at 1.1% of the home value adds $366.67 a month, and home insurance at $2,400 a year adds $200 a month. Your full monthly payment is $2,589.28, and the loan costs $408,142.36 in interest over the 30 years.

Now compare a 15-year loan on the same home at 5.75%. The monthly principal and interest rises to $2,657.31, which is a bigger payment to carry. In return, the total interest falls to $158,316.21. That is $249,826.15 less interest than the 30-year loan, and the home is yours 15 years sooner.

This is why the term matters as much as the rate. Run both terms with your own numbers above and look at the total interest line, not just the monthly payment. The Consumer Financial Protection Bureau offers free guides for home buyers.

Related mortgage calculators

• House Affordability Calculator: work out the price range your income can support before you shop.
• Down Payment Calculator: see how much you need to put down and how long it will take to save.
• Refinance Calculator: check whether a new rate would actually save you money on your current loan.
• Mortgage Points Calculator: find the break-even month before you pay for a lower rate.
• Biweekly Mortgage Calculator: see how paying every two weeks clears your loan years earlier.

How this calculator works

A mortgage payment is usually quoted as PITI, which stands for principal, interest, taxes and insurance. The principal and interest go to the lender, while the tax and insurance parts are often held in an escrow account and paid on your behalf when the bills fall due.

Your loan is amortised, which means the payment stays the same each month but the mix changes over time. In the early years most of each payment is interest, because that is when you owe the most; as the balance falls, more of every payment goes towards principal instead.

Choosing a shorter term, such as 15 years instead of 30, means a higher monthly payment, but you clear the loan far sooner and pay much less interest overall. Try both terms in the calculator above to see how large the difference can be before you decide.

Practical tips

• Put down 20% if you can, as it avoids private mortgage insurance (PMI).
• Get quotes from at least three lenders before you commit.
• Budget for closing costs of roughly 2 to 5% of the loan on top of your down payment.
• Keep the total housing cost near or below 28% of your gross income where possible.

Frequently asked questions

What does PITI mean?

PITI stands for principal, interest, taxes and insurance, the four parts of a typical monthly mortgage payment. Lenders use it to show the full monthly cost of the loan rather than just the amount you borrowed.

How much down payment do I need?

Many loans allow a down payment of between 3 and 20% of the home price. If you put down less than 20%, you will usually pay private mortgage insurance (PMI) until you reach 20% equity in the home.

Is a 15-year or 30-year mortgage better?

A 15-year loan has a higher monthly payment but a lower interest rate and far less interest overall. A 30-year loan is cheaper each month but costs much more over the full term, so the better choice depends on your budget and your plans.

What are closing costs?

Closing costs are the lender and third-party fees charged when you buy a home, typically 2 to 5% of the loan amount. They are paid at completion, on top of your down payment.