What is a mortgage calculator?
A mortgage calculator is a financial tool that calculates monthly mortgage payments, total interest, and total cost for home loans. It uses the home price, down payment, annual interest rate, and loan term to compute payments using the standard amortization formula. Mortgage calculators help homebuyers understand mortgage costs, compare loan options, and assess affordability before purchasing a home.
Drag the sliders or type values in the input fields for home price, down payment, interest rate, and loan term. The calculator automatically computes the monthly payment, loan amount, total interest, total paid, and total cost including down payment. Results update instantly as you change values, and a visual pie chart shows the breakdown of principal versus interest payments.
How to use this mortgage calculator
Start by dragging the home price slider or entering a value. Common prices range from $50,000 to $2,000,000. Next, set your down payment amount. A 20% down payment is standard and often eliminates private mortgage insurance (PMI). The calculator shows the down payment percentage and loan amount automatically.
Set the annual interest rate by dragging the slider or entering a value. Rates typically range from 0% to 10%, depending on market conditions and your credit score. Finally, set the loan term in years. Common terms are 10 to 35 years. Shorter terms mean higher monthly payments but less total interest, while longer terms mean lower monthly payments but more total interest.
The calculator instantly shows your monthly payment, loan amount, total interest over the loan term, total amount paid, and total cost including down payment. The pie chart on the right visualizes the breakdown of principal versus interest in your total payments. Use this information to assess affordability, compare different mortgage options, and plan for homeownership.
Understanding mortgage payments
Mortgage payments consist of principal and interest. Principal is the amount borrowed (home price minus down payment), and interest is the cost of borrowing money. In the early years of a mortgage, most of each payment goes toward interest, with a smaller portion reducing the principal. As the mortgage progresses, more of each payment goes toward principal, and less toward interest.
The monthly payment amount remains constant throughout the loan term (for fixed-rate mortgages), but the allocation between principal and interest changes over time. Understanding this helps homebuyers see how much they're actually paying in interest versus building equity in their home. The calculator shows the total interest paid over the entire loan term, and the pie chart visualizes this breakdown, helping homebuyers understand the true cost of borrowing.
Mortgage payment formula
The standard mortgage payment formula is: Monthly Payment = P × [r(1+r)^n] / [(1+r)^n - 1], where P is the loan principal (home price minus down payment), r is the monthly interest rate (annual rate ÷ 12), and n is the total number of monthly payments (years × 12). This formula accounts for compound interest and ensures that the mortgage is fully paid off by the end of the term.
For zero-interest mortgages (where r = 0), the formula simplifies to: Monthly Payment = Principal ÷ Number of Payments. This is a simple division because there's no interest to account for. The calculator handles both scenarios automatically, switching between the standard formula and the simplified version based on the interest rate entered.
Down payment and its impact
Down payment directly affects the loan amount and monthly payment. Larger down payments reduce the loan amount, resulting in lower monthly payments and less total interest. A 20% down payment is standard and often eliminates private mortgage insurance (PMI), which can add hundreds of dollars to monthly payments.
Smaller down payments increase loan amounts, monthly payments, and total interest, but require less upfront cash. Some loan programs allow down payments as low as 3% or 5%, making homeownership more accessible but increasing long-term costs. The calculator shows how different down payment amounts affect monthly payments and total interest, helping homebuyers make informed decisions.
Loan terms: 15-year vs 30-year mortgages
Loan terms significantly impact monthly payments and total interest. A 15-year mortgage has higher monthly payments but saves thousands of dollars in interest compared to a 30-year mortgage. For example, a $300,000 loan at 6.5% interest: 15-year term has monthly payment of $2,613, total interest of $170,340. 30-year term has monthly payment of $1,896, total interest of $382,633. The 30-year term saves $717 per month but costs $212,293 more in interest.
Shorter terms are ideal for homebuyers who can afford higher monthly payments and want to minimize total interest and build equity faster. Longer terms are better for homebuyers who need lower monthly payments to fit their budget, even if it means paying more interest over time. The calculator helps homebuyers see these trade-offs clearly, enabling informed decisions about loan terms.
Interest rates and mortgage costs
Interest rates directly affect monthly payments and total interest. Higher interest rates increase monthly payments and total interest over the loan term. A 1% difference in interest rate can significantly impact total interest paid over long loan terms. For example, on a $300,000 loan at 5.5% for 30 years, monthly payment is $1,703, total interest is $313,256. At 6.5%, monthly payment is $1,896, total interest is $382,633—a difference of $69,377 in interest.
Lower interest rates reduce monthly payments and total interest, making mortgages more affordable. Homebuyers with good credit scores typically qualify for lower interest rates, saving thousands of dollars over the loan term. The calculator helps homebuyers see the impact of different interest rates, encouraging them to improve credit scores or shop around for better rates.
Mortgage affordability and budgeting
Before taking out a mortgage, homebuyers should assess affordability by comparing monthly payments to their income and expenses. A common rule is that total housing costs (including mortgage payment, property taxes, insurance, and maintenance) should not exceed 28% of gross monthly income. The calculator helps homebuyers see monthly payments, enabling them to assess affordability before applying for mortgages.
Homebuyers should create a budget that includes the mortgage payment and ensures they can afford it along with other expenses. The calculator helps homebuyers see monthly payments, making it easier to plan budgets and ensure mortgage payments fit within their financial means. Consider all costs of homeownership, including property taxes, insurance, maintenance, and utilities, not just the mortgage payment.
Summary
This mortgage calculator calculates monthly mortgage payments, total interest, and total cost for home loans. Drag sliders or enter values for home price, down payment, interest rate, and loan term. It's free, works in your browser, and requires no account. Use it for home buying decisions, mortgage planning, or understanding mortgage costs.
The calculator uses the standard amortization formula to provide accurate results. Drag sliders or type values to compare different mortgage scenarios. See how home price, down payment, interest rate, and loan term affect monthly payments and total interest. The pie chart visualizes the breakdown of principal versus interest, helping you understand where your money goes. Use this tool to assess affordability, compare mortgage options, and make informed home buying decisions.