Mortgage Calculator

About this Mortgage Calculator

The Mortgage Calculator estimates a fixed monthly principal-and-interest payment for a home loan. It subtracts your down payment from the home price to find the loan amount, then applies the standard amortization formula used by most fixed-rate mortgages.

Because a mortgage is usually the largest recurring payment in a household budget, small differences in the interest rate or term make a large difference over 15-30 years. Running the same loan amount at a few different rates or terms side by side is often more useful than looking at a single result in isolation.

For related tasks, try Loan EMI Calculator, Car Loan Calculator or Compound Interest Calculator.

How the calculation works

The loan amount equals home price minus down payment. The monthly payment uses the standard amortization formula: payment = P × r × (1+r)^n ÷ ((1+r)^n − 1), where P is the loan amount, r is the monthly interest rate and n is the number of monthly payments.

How to use it

1. Enter the home price and down payment.
2. Enter the annual interest rate and loan term in years.
3. Calculate to see the monthly payment, total payment and total interest.

Practical example

For a 300,000 home with a 60,000 down payment, a 6% annual rate and a 30-year term, the loan amount is 240,000 and the calculator returns a fixed monthly principal-and-interest payment.

For comparison, the same 240,000 loan at 7% instead of 6% raises the monthly payment to about 1,596.73, an increase of roughly 158 per month, or almost 57,000 over the full 30-year term, which shows why even a one-point rate difference is worth negotiating over.

Things to double-check

This calculator estimates principal and interest only. Lenders typically also require property tax, homeowners insurance and sometimes private mortgage insurance (PMI) to be paid alongside the loan, often bundled into a single monthly escrow payment that can be significantly higher than the principal-and-interest figure shown here. Always compare the lender's official Loan Estimate document, which is required to disclose all these costs, before deciding based on this calculator alone.

What the principal and interest figure tells you

The monthly payment from this calculator covers only principal and interest, using the standard amortisation formula. For a 300,000 loan at 6.5 percent over 30 years, the payment is about 1,896, the total repaid is about 682,600 and the interest is about 382,600, which is more than the amount borrowed. On a 15 year term the same loan costs about 2,613 a month but only about 170,400 in interest. In the early years most of each payment goes to interest, so the balance falls slowly at first and faster later. That pattern is why small extra payments early in the loan have a large effect.

From the calculator figure to the real monthly cost

Your actual housing payment is usually higher. Suppose the 300,000 loan buys a 375,000 home. Property tax at 1.1 percent of the price is about 344 a month and insurance of 1,200 a year is 100 a month, which lifts the 1,896 payment to roughly 2,340. Some lenders collect these in an escrow account, and others expect you to pay them yourself. Add maintenance, which many owners budget at around 1 percent of the home's value per year, and any association or service charges. Compare the total with your income, not just the loan payment, when you decide how much house you can afford.

Down payment and mortgage insurance

A larger down payment reduces the loan, the payment and the total interest. On a 375,000 home, putting down 10 percent instead of 20 percent makes the loan 337,500 and the principal and interest payment about 2,133 instead of 1,896. In some countries a down payment below 20 percent also triggers mortgage insurance, which adds a monthly or yearly cost until you build enough equity. The cost varies with the lender and your credit profile, so ask for a quote. Compare the lower upfront cash with the higher monthly cost before choosing the smaller down payment.

Extra payments and shorter terms

Paying a little more each month shortens the loan more than people expect. Adding 200 a month to the 300,000 loan at 6.5 percent brings the payment to about 2,096 and clears the loan in about 23 years instead of 30, saving roughly 103,000 in interest. Before you do this, confirm that the lender applies extra money to principal and does not charge a prepayment penalty. Fixed rates keep the payment stable, while adjustable rates can start lower but reset later, so ask how high the payment could go if rates rise and whether you could still afford it.

When refinancing pays off

Refinancing replaces your loan with a new one, usually to lower the rate. On a 300,000 balance with 25 years left, a rate of 7 percent gives a payment of about 2,120, and 6 percent gives about 1,933, a saving of roughly 187 a month. If the closing costs are 4,000, you recover them in about 21 months. If you expect to move or sell sooner, refinancing may not pay off. Also remember that restarting a 30 year term can raise the total interest even if the payment falls, so compare the total cost and the remaining years.

Worked example: a first-time buyer

A buyer purchases a home for 250,000 with a 10 percent down payment of 25,000, so the loan is 225,000. At 6 percent over 30 years, the monthly principal and interest payment is about 1,349, the total paid over the loan is about 485,600 and the interest is about 260,600. On a 15 year term, the payment rises to about 1,899, but the total paid falls to about 341,700 and the interest to about 116,700. The shorter loan saves nearly 144,000 in interest for about 550 more each month. If your budget can carry the higher payment safely, the saving is large, but a lower payment gives more flexibility.

Fixed and adjustable rates

A fixed-rate loan keeps the same rate for the whole term, which makes budgeting simple. An adjustable-rate loan starts with a lower rate for an initial period and then resets, usually within limits called caps. Take the same 225,000 loan at 5 percent for the first five years: the payment is about 1,208, and the balance after five years is about 206,600. If the rate resets to 7 percent on the remaining 25 years, the payment jumps to about 1,460, an increase of 252 a month, or 21 percent. Ask about the cap on each reset and the maximum rate, and test whether you could afford the worst case.

Costs beyond the loan

Buying a home involves more than the deposit and the loan. Closing costs, such as legal fees, valuation, registration and lender charges, are often 2 to 5 percent of the price. You also need money for inspections, moving, repairs and furniture, and a reserve for emergencies. On a 250,000 purchase with a 25,000 down payment and 3 percent closing costs of 7,500, you need at least 32,500 in cash before moving costs. After you move in, add property tax, insurance, utilities and maintenance, which many owners budget at around 1 percent of the home value each year. Counting all of these gives a more honest picture of affordability.

Deciding how much to borrow

A common starting point is that housing costs should stay below about 28 percent of gross income, and total debts below about 36 percent. Test your plan against a rate increase of two percentage points and a drop in income, and make sure you still keep an emergency fund. Compare the full monthly cost of owning with renting a similar home, and remember that transaction costs mean buying usually makes sense only if you stay for several years. Avoid borrowing the maximum a lender will approve: the lender measures risk to itself, not to your lifestyle, and a more modest loan leaves room for life to change.

Key terms explained

The principal is the amount borrowed. The loan-to-value ratio compares the loan with the value of the home, so a 225,000 loan on a 250,000 home is 90 percent. Private mortgage insurance protects the lender when the down payment is small. An escrow account collects property tax and insurance with the monthly payment. Amortisation is the gradual repayment of principal through scheduled payments. Points are fees paid to lower the interest rate. Closing costs are the fees for completing the purchase, and pre-approval is a lender's preliminary assessment of how much it will lend you.

Rules of thumb and quick checks

For a 30 year fixed loan, the principal and interest payment per 1,000 borrowed is about 5.37 at 5 percent, 6.00 at 6 percent and 6.65 at 7 percent, so a 300,000 loan costs roughly 1,611, 1,799 and 1,996 a month. Each percentage point change in rate on a loan of that size therefore moves the payment by around 190 to 200. A down payment of 20 percent usually avoids mortgage insurance. Add property tax, insurance and maintenance to the figure from the calculator before you decide that a home is affordable.

Read the full guide

Want the background, a step-by-step example and the common mistakes? Read How to Calculate Loan EMI: Formula, Worked Example and Tips. Learn the EMI formula with a step-by-step example, see how interest and principal change monthly, and compare flat and reducing balance rates.

Frequently asked questions