How the Mortgage Calculator Works
This mortgage calculator estimates your monthly payment, total interest paid, and full amortization schedule using the standard fixed-rate formula: M = P[r(1+r)^n] / [(1+r)^n - 1], where P is the principal loan amount, r is the monthly interest rate (annual rate divided by 12), and n is the total number of monthly payments. This is the same formula used by every lender for fixed-rate mortgages.
What Your Payment Includes
The payment calculated here covers principal and interest only. Your actual monthly housing payment will also include property taxes, homeowners insurance, and -- if your down payment is less than 20% -- private mortgage insurance (PMI). Use the principal and interest total here as your baseline and add your estimated taxes and insurance on top.
How Interest Accumulates Over Time
On a fixed-rate mortgage, your monthly payment stays the same throughout the term, but the split between principal and interest shifts dramatically over time. In the early years of a 30-year mortgage, the majority of each payment covers interest. As the balance decreases, more of each payment reduces principal. The amortization schedule shows this shift month by month.
30-Year vs. 15-Year Mortgage
A 30-year mortgage produces a lower monthly payment than a 15-year mortgage on the same loan amount, but the total interest paid is substantially higher. On a $400,000 loan at 7%, a 30-year term produces a monthly payment of approximately $2,661 and total interest of approximately $558,000. The same loan on a 15-year term produces approximately $3,595 per month but total interest of only approximately $247,000.
Frequently Asked Questions
What credit score do I need for a mortgage? Conventional loans typically require a minimum score of 620. FHA loans allow scores as low as 580 with 3.5% down. The higher your score, the lower your rate.
How much house can I afford? A common guideline is that your total housing payment should not exceed 28% of your gross monthly income. Use our affordability guide for a full breakdown.
What is a good mortgage rate? Rates change weekly. Freddie Mac publishes the Primary Mortgage Market Survey (PMMS) each Thursday, the most widely cited benchmark for current 30-year fixed rates.