Mortgage Calculator

How mortgage payments are calculated

A fixed-rate mortgage has the same principal-and-interest payment every month, set so the loan reaches exactly zero at the end of the term. The formula is M = P × r(1 + r)ⁿ ÷ ((1 + r)ⁿ − 1), where P is the loan amount, r is the annual rate divided by 12, and n is the number of monthly payments. For a $360,000 loan at 6.5% over 30 years, r = 0.005417 and n = 360, which gives $2,275.44 a month.

Each month, interest is charged on the remaining balance and the rest of the payment reduces principal. Early on most of the payment is interest; in that example the first payment is $1,950 interest and $325 principal. As the balance falls, the split shifts toward principal, which is why the balance chart curves.

What's in a monthly payment

Lenders often call the full payment PITI, plus a couple of extras:

• Principal and interest. The loan repayment itself, fixed for the life of a fixed-rate loan.
• Taxes. Property tax, usually collected monthly into an escrow account and paid by your servicer.
• Insurance. Homeowners insurance, also usually escrowed. Flood or earthquake cover is extra where required.
• PMI. Private mortgage insurance on conventional loans with less than 20% down.
• HOA dues. Paid to the homeowners association, usually not through your lender, but part of your housing cost.

Down payment and PMI

Put down less than 20% on a conventional loan and the lender will usually require private mortgage insurance, typically about 0.3% to 1.5% of the loan amount a year depending on your credit score and down payment. It protects the lender, not you.

Under the Homeowners Protection Act, PMI must end automatically on the date your balance is scheduled to reach 78% of the home's original value, if you're current on payments. You can request cancellation earlier, once the balance reaches 80%, including through extra payments. This calculator counts PMI until the scheduled 78% date. FHA loans charge their own mortgage insurance premium under separate rules, often for the life of the loan.

How much house can I afford?

The classic guideline is the 28/36 rule: spend no more than 28% of gross monthly income on housing and no more than 36% on all debt payments, housing included. Lenders measure this as your debt-to-income ratio, and many approve higher ratios than that, but a payment that fits the 28% line leaves room for maintenance, savings and the unexpected.

Work backward: multiply your gross monthly income by 0.28, then adjust the home price here until the monthly payment matches. The paycheck calculator shows what you actually take home, which is a useful second check.

15-year vs. 30-year mortgage

Shorter terms usually come with lower rates and cost far less interest, but the monthly payment is much higher. A $320,000 loan at illustrative rates:

A middle path is to take the 30-year loan for its lower required payment and pay extra when you can. You won't match the 15-year rate, but you keep the flexibility to fall back to the smaller payment in a tight month.

Paying off a mortgage faster

Every extra dollar of principal stops accruing interest for the rest of the loan, so extra payments early in the term have the biggest effect. On the default $360,000 loan, $200 extra a month pays it off about six years early and saves roughly $109,000 in interest. Enter an amount in the extra principal field to see your own numbers.

Biweekly plans, paying half the monthly amount every two weeks, work the same way: 26 half payments equal 13 full payments a year, one more than the 12 you'd otherwise make. Before paying extra, confirm your loan has no prepayment penalty and ask your servicer to apply the money to principal.

Should I refinance?

Refinancing replaces your loan with a new one, ideally at a lower rate. To judge it, divide the closing costs by the monthly savings for a break-even point: $6,000 in costs and $200 a month saved breaks even after 30 months. If you'll keep the home well beyond that, it can pay off. Use this calculator with your current balance as the home price and a 0% down payment to price the new loan, and compare against your current payment. The APR calculator folds the closing costs into a single comparable rate.

Sources

The formulas on this page come from the published research below. Last updated October 11, 2026. This calculator gives estimates for general information. It isn't medical advice, so check anything important with a qualified professional.

1. Consumer Financial Protection Bureau. When can I remove private mortgage insurance (PMI) from my loan?Used for: Automatic PMI termination at a scheduled 78% loan-to-value, borrower-requested cancellation at 80%, and the midpoint rule
2. Consumer Financial Protection Bureau. What is a debt-to-income ratio?Used for: How lenders measure affordability with debt-to-income ratios