Mortgage Calculator

A mortgage calculator estimates your monthly mortgage payment based on home price, down payment, loan term, and interest rate. It can also factor in property taxes, homeowner's insurance, and HOA fees to show your total PITI (Principal, Interest, Taxes, Insurance) payment.

The monthly principal and interest is calculated using the standard amortization formula: M = 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 number of monthly payments (years × 12). For a $400,000 loan at 7% for 30 years: r = 0.07/12 ≈ 0.00583, n = 360. Result: approximately $2,661/month in principal and interest.

A 20% down payment is traditionally recommended because it eliminates Private Mortgage Insurance (PMI), which typically costs 0.5%–1.5% of the loan amount annually. However, many conventional loans allow as little as 3% down (Fannie Mae HomeReady, Freddie Mac Home Possible), FHA loans require only 3.5% with a credit score of 580+, and VA/USDA loans offer 0% down for qualified borrowers. Source: CFPB mortgage guide.

Private Mortgage Insurance (PMI) protects the lender if you default and is required on conventional loans when your down payment is less than 20%. PMI typically costs 0.2%–2% of your loan amount annually and is added to your monthly payment. Under the Homeowners Protection Act, your lender must automatically cancel PMI when your loan balance reaches 78% of the original home value. You can also request cancellation at 80% LTV if your payment history is good.

A 30-year mortgage has lower monthly payments but higher total interest cost. A 15-year mortgage has higher monthly payments but builds equity faster and saves significantly on total interest. Example: $300,000 at 7% — 30-year: $1,996/month, total interest $418,527. 15-year: $2,696/month, total interest $185,218. The 15-year saves over $233,000 in interest but costs $700 more per month. Per the Federal Reserve, lower monthly payments make homeownership accessible to more buyers despite the higher lifetime cost.

Credit score requirements vary by loan type. Conventional loans: typically 620+ (best rates at 740+). FHA loans: 580+ for 3.5% down, 500-579 for 10% down. VA loans: no official minimum but most lenders want 620+. Jumbo loans: typically 700+. According to CFPB data, borrowers with scores above 760 receive significantly better interest rates than those in the 620-679 range, potentially saving tens of thousands over the loan term.

The general guideline is the 28/36 rule: your housing costs (PITI) should not exceed 28% of gross monthly income, and total debt payments should not exceed 36% (some lenders allow up to 43%). Example: With a $6,000/month gross income, maximum PITI = $1,680 (28%) and maximum total debt = $2,160 (36%). Use our Home Affordability Calculator for a more precise estimate based on your debts and local tax rates.

Closing costs are fees paid at the closing of a real estate transaction, typically 2%–5% of the loan amount. On a $300,000 home, expect $6,000–$15,000 in closing costs. Common fees include: origination fees (0.5%–1% of loan), appraisal ($300–$600), title insurance ($500–$1,500), attorney fees, recording fees, and prepaid items like homeowner's insurance and property tax escrow. Some costs are negotiable or can be rolled into the loan. Source: CFPB.

Fixed-rate mortgages lock in your interest rate for the entire loan term, providing payment predictability. They're best when rates are low or you plan to stay long-term. Adjustable-rate mortgages (ARMs) start lower but adjust periodically (e.g., a 5/1 ARM is fixed for 5 years, then adjusts annually). ARMs can be advantageous if you plan to sell within the fixed period, but carry rate-increase risk. The Federal Reserve's rate environment is a key factor in this decision.

An amortization schedule is a table showing each monthly payment broken down into principal and interest components over the full loan term. In the early years of a mortgage, most of your payment goes toward interest. As the loan matures, a larger share goes toward principal. For a 30-year mortgage, you won't pay more toward principal than interest until about year 18. This is why making extra principal payments early in the loan saves the most interest.

On a $400,000 30-year mortgage, every 1% change in interest rate changes your monthly principal and interest payment by roughly $240–$260. At 6%: $2,398/month. At 7%: $2,661/month. At 8%: $2,935/month. Over 30 years, a 1% higher rate costs approximately $85,000–$95,000 in additional interest. This illustrates why shopping for the best rate — even a 0.25% difference — can save tens of thousands over the life of the loan.

A jumbo loan is a mortgage that exceeds the conforming loan limits set by the Federal Housing Finance Agency (FHFA). For 2024, the conforming limit is $766,550 in most U.S. markets (higher in high-cost areas). Jumbo loans typically require higher credit scores (700+), larger down payments (10%–20%), and more documentation. Interest rates may be slightly higher than conforming loans due to the increased risk for lenders.