Mortgage Calculator

Calculate your monthly mortgage payment, total interest, and view a detailed amortization schedule. Plan your home purchase with precision.

What is a Mortgage?

A mortgage is a type of loan used to purchase real estate, where the property itself serves as collateral. The borrower agrees to pay back the loan, plus interest, over a set period (typically 15 or 30 years) through regular monthly payments.

Each monthly payment consists of two parts: principal (reducing the loan balance) and interest (the cost of borrowing). In the early years, a larger portion goes toward interest; as the loan matures, more goes toward principal. This is known as amortization.

The down payment is the upfront amount paid by the buyer. A 20% down payment is standard and typically avoids the need for Private Mortgage Insurance (PMI). A larger down payment reduces both the monthly payment and total interest paid.

Mortgage Payment Formula

Monthly mortgage payments are calculated using the standard amortization formula:

M = P × [r(1 + r)n] / [(1 + r)n − 1]

Where:

  • M = Monthly payment
  • P = Principal loan amount (home price minus down payment)
  • r = Monthly interest rate (annual rate ÷ 12 ÷ 100)
  • n = Total number of payments (years × 12)

Example: $400,000 Home at 6.5% Interest

Scenario: Purchase a $400,000 home with 20% down at 6.5% interest over 30 years.

Step 1: Calculate Loan Amount

Down Payment = $400,000 × 20% = $80,000
Loan = $400,000 − $80,000 = $320,000

Step 2: Convert Rate

r = 6.5% ÷ 12 ÷ 100 = 0.005417

Step 3: Calculate Monthly Payment

n = 30 × 12 = 360 months
M = $320,000 × [0.005417 × 1.005417³⁶⁰] / [1.005417³⁶⁰ − 1]
M ≈ $2,023/month

Result

  • Monthly Payment: $2,023
  • Total Paid: $728,280 over 30 years
  • Total Interest: $408,280

People Also Ask

How is a monthly mortgage payment calculated?
The monthly payment is calculated using: M = P[r(1+r)ⁿ] / [(1+r)ⁿ − 1], where P is the loan principal, r is the monthly interest rate (annual rate ÷ 12 ÷ 100), and n is the total number of payments (years × 12). This is a standard amortization formula.
What is an amortization schedule?
An amortization schedule is a table showing each monthly payment broken down into principal and interest portions. Early payments are mostly interest; as the loan matures, more of each payment goes toward the principal.
How does a larger down payment affect my mortgage?
A larger down payment reduces the principal loan amount, which directly lowers your monthly payment and total interest paid over the loan term. A 20% down payment also typically avoids the need for Private Mortgage Insurance (PMI).