Mortgage calculator

How the payment is calculated

A fixed-rate mortgage uses the standard amortisation formula:

M = P × [ r(1 + r)ⁿ ] / [ (1 + r)ⁿ − 1 ]

Where M is the monthly payment, P is the amount borrowed, r is the monthly interest rate (the annual rate divided by 12) and n is the total number of monthly payments.

Every payment is the same size, but its composition changes. Interest is charged on whatever you still owe, so early payments are mostly interest and late payments are mostly principal. This calculator builds the schedule month by month rather than using a closed-form shortcut, which is why the final payment absorbs any rounding remainder - exactly as a lender’s statement does.

A worked example

Take a $400,000 home with 20% down at 6.5% over 30 years:

• Amount borrowed: $320,000
• Monthly principal and interest: $2,022.62
• Total interest over the term: $408,143
• Total repaid: $728,143

You pay back more than twice what you borrowed. In the first month, $1,733 of that $2,022 payment is interest and only $289 reduces the balance. It takes until roughly year 19 before more than half of each payment goes toward principal.

What “monthly payment” actually includes

Lenders quote principal and interest, but the money leaving your account each month is usually PITI plus extras:

Component	Typical size	Notes
Principal & interest	Base figure	Fixed for the whole term on a fixed-rate loan
Property tax	0.5–2.5% of value a year	Varies enormously by county
Homeowners insurance	$1,200–$2,500 a year	Higher in flood and wildfire zones
PMI	0.5–1% of the loan a year	Only while equity is under 20%
HOA fees	$0–$700 a month	Not collected in escrow, but still due

On the example above, tax and insurance add roughly $550 a month - a 27% increase over the advertised payment.

Reading the amortisation schedule

The schedule shows what you owe at the end of each year. Two things are worth checking before you sign:

The crossover point. Find the year where principal first exceeds interest in the annual totals. On a 30-year loan at current rates that is around year 19; on a 15-year loan it is year 4. That single number tells you how long you are effectively renting money rather than buying equity.

The cost of an extra payment. Because interest accrues on the remaining balance, money paid early is worth far more than money paid late. Adding $200 a month to the example loan clears it in 23.4 years instead of 30 - six and a half years early - and saves about $105,000 in interest. That is a return no savings account will match.

Things this calculator does not know

Rates on adjustable-rate mortgages reset, and this tool assumes a fixed rate for the whole term. It also excludes closing costs, points, appraisal and title fees, which typically add 2–5% of the purchase price up front. If you are comparing offers, ask each lender for a Loan Estimate - the standardised form makes the true cost comparable in a way advertised rates do not.