Mortgage

# Mortgage Calculator

Most people need a mortgage to finance a home purchase. Use our mortgage calculator to estimate your monthly house payment, including principal and interest, property taxes, and insurance. Try out different inputs for the home price, down payment, loan terms, and interest rate to see how your monthly payment would change.

### Key Takeaways

• Using a mortgage calculator can help you determine what house you can afford, given various inputs.
• You can choose the length of the mortgage, interest rate, down payment, and whether to include any taxes, fees, or insurance in the monthly cost.
• The results will show the breakdown between interest and principal in the payments.
• Interest rates are generally higher for loans of longer length and for borrowers with low credit scores.

## Mortgage Calculator Results Explained

To use the mortgage calculator, enter a few details about the loan, including:

• Home price: The purchase price of the home.
• Down payment: The cash you pay upfront to buy a home, expressed as a percentage of the full loan amount. The size of your down payment can affect your interest rate—lenders typically offer lower rates if you make a larger down payment. (Default setting = 20%.)
• Loan term: The amount of time you have to repay the loan. In general, the longer the term, the lower your monthly payment, but the more interest you will pay overall. The shorter the term, the higher your monthly payment and the less interest you will pay. (Default setting = 30 years.)
• Loan APR: The cost to borrow the money, expressed as a percentage of the loan. Alternatively, enter your credit score range to see an interest rate estimate. (Default setting = last month’s national average.)
• Property taxes: The annual tax you pay as a real property owner, levied by your city, county, or municipality. (Default setting = the national average.)
• Homeowners insurance: Your annual cost to insure your home and belongings against theft, fire, natural disasters, personal liability claims, and other covered perils. Mortgage lenders require borrowers to buy home insurance coverage. If you live in a flood-prone area, your lender may also require flood insurance. And if you’re in an area that’s vulnerable to seismic activity, you may need earthquake coverage. (Default setting = the national average.)
• HOA fees: The monthly amount you pay to your homeowners’ association (HOA), if the property you are considering has one, to help cover the costs of maintaining and improving the properties and amenities within the association.

## Costs Often Included in a Monthly Mortgage Payment

Monthly mortgage payments typically include four costs—principal, interest, taxes, and insurance, collectively known as PITI. Here’s a closer look at each one:

• Principal: The amount you borrow and have to pay back. Mortgages are structured so that the amount of principal you repay each month starts low and increases over time.
• Interest: The cost to borrow the money. In the early years of your loan, more of your monthly payment applies to interest. Eventually, that shifts so that more of your payment goes toward the principal. On a 30-year fixed-rate mortgage, that “tipping point” happens about halfway through the loan term.
• Taxes: Everyone who owns real property (i.e., real estate) owes property taxes. Local governments collect these taxes to help fund projects and services that benefit the entire community—such as roads, schools, hospitals, and emergency services. If you have a mortgage, your property tax bill may be included as part of your monthly mortgage payment. If so, the lender collects the payments and holds them in escrow until your tax bill is due.
• Insurance: Your monthly mortgage payment might include two types of insurance if your lender requires them: home insurance and private mortgage insurance (PMI). Home insurance protects your home and belongings against theft, fire, natural disasters, personal liability claims, and other covered perils. Private mortgage insurance is required if you have a conventional mortgage and make a down payment of less than 20% of the home’s purchase price.

If your condominium, co-op, or neighborhood has a homeowners’ association (HOA), you may also owe HOA dues. Although these fees aren’t usually part of a mortgage payment, some mortgage servicers will, upon request, include them in the escrow portion of the payment.

## How to Calculate Monthly Mortgage Payments

You can use our mortgage calculator to calculate your monthly payment (the easy way), or you can do it yourself if you’re up for a little math. Here’s the standard formula to calculate your monthly mortgage payment by hand. To figure out your monthly mortgage payment (“M”), plug in the principal (“P”), monthly interest rate (“i”), and number of months (“n”) from your loan and solve:

\begin{aligned}&M = \frac{ P \left [ i (1 + i) ^ n \right ] }{ \left [ (1 + i) ^ n – 1 \right ] } \\&\textbf{where:} \\&P = \text{Principal loan amount (the amount you borrow)} \\&i = \text{Monthly interest rate} \\&n = \text{Number of months required to repay the loan} \\\end{aligned}

## How to Calculate My Mortgage Interest

Interested in calculating just your mortgage interest? There’s a formula for that, too. Here’s a quick way to calculate one month of mortgage interest:

\begin{aligned} &\text{Monthly Interest} = \frac{ \text{Loan Balance} \times \text{Interest Rate} }{ 12 } \\ \end{aligned}