Mortgage Calculator

Monthly mortgage payments are calculated using the formula: M = P[r(1+r)^n]/[(1+r)^n-1], where P is the loan amount (home price minus down payment), r is the monthly interest rate, and n is the total number of payments. This formula ensures equal monthly payments over the life of the loan.

A 20% down payment is traditionally recommended because it lets you avoid private mortgage insurance (PMI) and reduces your monthly payment. However, many loans allow 3-10% down. A larger down payment means a smaller loan and less total interest paid over the life of the mortgage.

A shorter loan term (like 15 years) results in higher monthly payments but significantly less total interest paid. A longer term (like 30 years) gives you lower monthly payments but you pay much more in total interest. For example, a 30-year mortgage typically costs about twice as much in interest as a 15-year mortgage.

Amortization is the process of gradually paying off a loan through regular payments. In the early years, most of your payment goes toward interest. Over time, a larger portion goes toward principal. This calculator shows how principal and interest portions change for your first and last payments.

This calculator focuses on principal and interest (P&I), which is the core mortgage payment. Property taxes, homeowner's insurance, and PMI (if applicable) are additional costs that vary by location and situation. Your actual total housing payment will be higher than the P&I amount shown.