Mortgage Calculator
Calculate your monthly mortgage payment, including principal, interest, taxes, and insurance.
How to Use This Mortgage Calculator
Our mortgage calculator helps you estimate your monthly mortgage payment, including principal, interest, property taxes, and home insurance (PITI). Here's how to use it:
- Enter the home price (the total purchase price of the home).
- Enter your down payment amount (your initial payment).
- Adjust the interest rate to match the rate offered by your lender.
- Set the loan term (typically 15 or 30 years).
- Optionally, enter your annual property tax and home insurance costs.
The calculator will instantly show your monthly payment and other important figures. You can also view a year-by-year amortization schedule to see how your loan balance decreases over time.
Understanding Mortgage Payments
Your monthly mortgage payment typically consists of four components, often referred to as PITI:
- Principal: The amount you borrowed that goes toward paying off your loan balance.
- Interest: The cost of borrowing money, calculated as a percentage of your remaining loan balance.
- Taxes: Property taxes assessed by your local government, often collected monthly by your lender.
- Insurance: Homeowners insurance that protects your property, also typically collected monthly by your lender.
In the early years of your mortgage, a larger portion of your payment goes toward interest. As you pay down your loan, more of each payment goes toward the principal.
Mortgage Calculator Formula
The monthly principal and interest payment is calculated using this formula:
M = P [ r(1 + r)^n ] / [ (1 + r)^n - 1]Where:
- M = Monthly payment
- P = Principal (loan amount)
- r = Monthly interest rate (annual rate divided by 12 and converted to decimal)
- n = Total number of payments (loan term in years × 12)
Tips for Reducing Your Mortgage Payment
- Make a larger down payment to reduce the principal amount.
- Shop around for the best interest rate from different lenders.
- Consider a longer loan term (though this increases total interest paid).
- Improve your credit score before applying for a mortgage.
- Consider paying points to lower your interest rate.
- Look into first-time homebuyer programs that may offer better rates.