Mortgage Calculator
Calculate monthly mortgage payments, total interest, and amortization schedule.
Enter home price to calculate your monthly payment
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About This Calculator
A mortgage is likely the largest financial commitment you'll ever make—Americans collectively hold over $12.5 trillion in mortgage debt, with the average homeowner paying more than $150,000 in interest alone over a 30-year loan. Understanding exactly what you're signing up for isn't just smart—it's essential. Our Mortgage Calculator helps you estimate monthly payments, total interest costs, and the complete breakdown of your home loan before you commit to decades of payments.
Enter your home price, down payment, interest rate, and loan term to instantly see your projected monthly payment including principal, interest, taxes, and insurance (PITI). Explore the full amortization schedule to visualize how each payment chips away at your balance over time—and discover strategies that could save you tens of thousands of dollars. Whether you're a first-time buyer nervous about the process or a seasoned homeowner considering a refinance, this calculator puts the power of informed decision-making in your hands.
How to Use the Mortgage Calculator
- 1Enter the home purchase price or the specific loan amount you need.
- 2Input your down payment as a dollar amount or percentage (aim for 20% to avoid PMI).
- 3Set the annual interest rate—check current averages and get quotes from multiple lenders.
- 4Choose your loan term: 30 years for lower payments, 15 years for massive interest savings.
- 5Add property tax and homeowners insurance estimates for accurate total payment.
- 6Review the complete monthly payment breakdown showing principal, interest, taxes, and insurance.
- 7Explore the amortization schedule to see exactly how your balance decreases over time.
- 8Experiment with different scenarios—try adding extra payments to see potential savings.
Formula
M = P × [r(1+r)^n] / [(1+r)^n - 1]The standard mortgage payment formula calculates your fixed monthly payment based on three key variables: the principal amount borrowed (P), the monthly interest rate (r = annual rate / 12), and the total number of monthly payments (n = years × 12). This amortization formula ensures each payment covers the interest due that month while also reducing the principal balance. Early in the loan, most of your payment goes toward interest; by the end, nearly all goes to principal. This is why extra payments early in your mortgage have an outsized impact on total interest savings.
The Mortgage Payment Formula Explained
The Standard Amortization Formula:
M = P × [r(1+r)^n] / [(1+r)^n - 1]
Where:
- M = Monthly payment (principal and interest only)
- P = Principal (the amount you borrow)
- r = Monthly interest rate (annual rate ÷ 12, expressed as decimal)
- n = Total number of payments (loan term in years × 12)
Step-by-Step Example (January 2026 Numbers):
- Home price: $410,000 (near the U.S. median of $409,200)
- Down payment: 20% ($82,000)
- Loan amount (P): $328,000
- Interest rate: 6.15% annually → 0.5125% monthly (r = 0.005125)
- Term: 30 years → 360 payments (n = 360)
Calculation:
- Calculate (1+r)^n: (1.005125)^360 = 6.3262
- Calculate r(1+r)^n: 0.005125 × 6.3262 = 0.03242
- Calculate (1+r)^n - 1: 6.3262 - 1 = 5.3262
- Divide: 0.03242 ÷ 5.3262 = 0.006088
- Multiply by principal: $328,000 × 0.006088 = $1,996.86/month
Total Cost Over 30 Years:
- Total payments: $1,996.86 × 360 = $718,870
- Total interest paid: $718,870 - $328,000 = $390,870
- You'll pay 1.19x the original loan amount in interest alone!
Understanding PITI: Your True Monthly Cost
Your mortgage payment is more than just principal and interest. Lenders and financial planners use "PITI" to represent your complete monthly housing obligation:
P - Principal: The portion that actually pays down your loan balance. Early payments are mostly interest; your principal payment grows over time.
I - Interest: The cost of borrowing money, paid to your lender. This is their profit and your largest expense over the life of the loan.
T - Taxes: Property taxes vary dramatically by location—from 0.28% in Hawaii to 2.47% in New Jersey. They're typically collected monthly and held in escrow.
I - Insurance: Homeowners insurance protects against damage and liability. Required by all lenders.
Real-World January 2026 PITI Example ($410,000 home, 20% down):
| Component | Monthly | Annual |
|---|---|---|
| Principal & Interest | $1,997 | $23,964 |
| Property Tax (1.1%) | $376 | $4,510 |
| Homeowners Insurance | $200 | $2,400 |
| Total PITI | $2,573 | $30,874 |
If Down Payment < 20%, Add PMI:
- PMI typically costs 0.5-1.5% of loan amount annually
- On a $328,000 loan: $137-410/month extra
- PMI can be removed at 20% equity (usually after ~7-10 years)
Hidden Costs Beyond PITI:
- HOA fees: $200-500+/month in many communities
- Maintenance: Budget 1-2% of home value annually ($4,200-8,400)
- Utilities: Often higher than renting due to larger space
- Repairs reserve: Major systems (HVAC, roof) cost $5,000-15,000+
15-Year vs. 30-Year Mortgage: The $200,000 Decision
Choosing between a 15-year and 30-year mortgage is one of the biggest financial decisions you'll make. Here's how they compare with January 2026 rates:
30-Year Mortgage ($328,000 at 6.15%):
- Monthly P&I: $1,997
- Total interest paid: $390,920
- Total cost: $718,920
- Payoff date: 2056
15-Year Mortgage ($328,000 at 5.38%):
- Monthly P&I: $2,688
- Total interest paid: $155,840
- Total cost: $483,840
- Payoff date: 2041
Difference: You save $235,080 with the 15-year option!
| Factor | 15-Year | 30-Year |
|---|---|---|
| Monthly Payment | $691 higher | $691 lower |
| Interest Rate | ~0.75% lower typically | Higher |
| Total Interest | $155,840 | $390,920 |
| Build Equity | 2x faster | Slower |
| Payment Flexibility | Less room | More cushion |
| Tax Deduction | Less interest to deduct | More deductible interest |
Choose 15-Year If:
- Your payment stays under 25% of gross income
- You have a fully-funded emergency fund (6+ months)
- You're 45+ and want to retire mortgage-free
- You prefer guaranteed savings over investment returns
Choose 30-Year If:
- You want maximum cash flow flexibility
- You'll invest the monthly difference ($702 → potential $400k+ over 30 years at 8%)
- Your income is variable or commission-based
- You're buying in a high-cost market and need affordability
The Hybrid Approach: Get a 30-year mortgage but make payments as if it's a 15-year. You get flexibility to reduce payments during hardship while building equity fast when times are good.
Current Mortgage Rate Environment (January 2026)
Understanding today's rate environment helps you time your purchase or refinance decision:
Historical Context:
| Period | 30-Year Rate | Context |
|---|---|---|
| Oct 1981 | 18.63% | Peak - Volcker inflation fight |
| 2000 | 8.05% | Dot-com era |
| 2008 | 6.03% | Pre-crisis |
| Jan 2021 | 2.65% | Historic low (pandemic stimulus) |
| Oct 2023 | 7.79% | Post-pandemic peak |
| Late 2025 | 6.50% | Fed rate cuts begin |
| Jan 2026 | 6.15% | One-year low - current |
What's Driving Current Rates: The Federal Reserve delivered three consecutive rate cuts totaling 75 basis points in late 2025 (September-December), bringing relief to the mortgage market. Rates have fallen from nearly 7% to around 6.15% - a new one-year low.
2026 Rate Forecasts:
- MBA expects 30-year rates near 6.4% through 2026
- Fannie Mae predicts rates above 6% through 2026, dipping to 5.9% by Q4 2026
- Experts expect stability: "We should see the 30-year fixed at an average of 6.25%"
Rate Impact Calculator: On a $328,000 loan over 30 years:
| Rate | Monthly P&I | Total Interest |
|---|---|---|
| 5.5% | $1,863 | $342,680 |
| 6.0% | $1,967 | $380,120 |
| 6.15% | $1,997 | $390,920 |
| 6.5% | $2,073 | $419,280 |
| 7.0% | $2,182 | $458,520 |
Each 0.5% rate increase costs ~$38,000 over the life of the loan!
The True Cost of Waiting to Buy
Many potential buyers wonder whether to wait for lower rates or prices. Here's the math for January 2026:
Scenario: Buy Now vs. Wait One Year
Buy Now ($410,000 home, 6.15% rate):
- Down payment: $82,000
- Monthly PITI: ~$2,573
- One year of payments: $30,876
- Equity built (year 1): ~$8,200 (principal) + any appreciation
Wait One Year (assuming 2% appreciation per Zillow/Redfin forecasts, rates drop to 5.9%):
- New price: $418,200
- Down payment needed: $83,640 (you saved an extra $1,640)
- New loan: $334,560
- Monthly P&I at 5.9%: $1,988 (saves $9/month on P&I)
- But: You paid ~$24,000 in rent while waiting
- You missed $8,200 in appreciation (if you had bought)
- Net loss from waiting: ~$30,000+
The Hidden Costs of Waiting:
- Rent paid: $2,000+/month that builds zero equity
- Missed appreciation: Home prices historically rise 3-5% annually
- Mortgage paydown missed: Each payment builds ownership
- Rate uncertainty: Rates could rise instead of fall
- Opportunity cost: Delayed wealth building in your primary asset
When Waiting Makes Sense:
- You need to improve credit score significantly (50+ points)
- You're building toward 20% down to avoid PMI
- You're relocating within 2-3 years
- The market shows clear signs of correction in your area
Strategies to Pay Off Your Mortgage Faster
Paying extra toward your mortgage can save massive amounts of interest. Here are proven strategies:
Strategy 1: Bi-Weekly Payments Instead of 12 monthly payments, make 26 bi-weekly half-payments (equals 13 monthly payments/year).
Example ($328,000 at 6.15%, 30 years):
- Standard: $1,997/month for 360 months
- Bi-weekly: $999 every two weeks
- Payoff: 25.5 years instead of 30
- Interest saved: $58,500
Strategy 2: Round Up Payments Round your payment to the nearest $100 or add a fixed amount.
Adding $200/month to a $328,000 loan at 6.15%:
- Payoff: 24.8 years (5+ years early)
- Interest saved: $82,400
Strategy 3: Annual Lump Sum Apply tax refunds, bonuses, or gifts directly to principal.
$3,000 annual extra payment:
- Payoff: 24 years
- Interest saved: $102,000
Strategy 4: Refinance to Shorter Term When rates drop, refinance from 30-year to 15-year.
Strategy 5: The Dollar-a-Month Method Month 1: Add $1 extra. Month 2: Add $2 extra. Continue increasing. By month 60, you're adding $60/month—painlessly habit-forming.
Important Considerations:
- Verify your lender applies extra payments to principal (not future payments)
- Check for prepayment penalties (rare but possible)
- Balance mortgage payoff vs. retirement savings (get employer 401k match first)
- Keep 6-month emergency fund before aggressive payoff
- Mortgage interest is tax-deductible—factor this into your decision
Pro Tips
- 💡Get pre-approved before house hunting—it defines your budget and strengthens offers in competitive markets.
- 💡Compare rates from at least 3-5 lenders on the same day. Even 0.25% difference saves thousands over the loan term.
- 💡Don't forget closing costs: budget 2-5% of purchase price beyond your down payment.
- 💡Your mortgage payment shouldn't exceed 28% of gross income—but staying at 25% gives you breathing room.
- 💡Make one extra payment per year (or pay biweekly) to shave 4-5 years off a 30-year mortgage.
- 💡Lock your rate once you find a good one—timing the absolute bottom is nearly impossible.
- 💡Consider a 15-year mortgage if you can afford payments—you'll save 60%+ on total interest paid.
- 💡Check your credit report 3-6 months before applying—you need time to fix errors or improve score.
- 💡Don't open new credit cards or make large purchases during the mortgage process—it can derail approval.
- 💡Budget 1-2% of home value annually for maintenance and repairs beyond your mortgage payment.
Frequently Asked Questions
The standard guideline is the 28/36 rule: your monthly housing payment (PITI) shouldn't exceed 28% of gross monthly income, and total debt payments shouldn't exceed 36%. Here's a practical breakdown:
Income-to-Mortgage Guide (at 6.15% rate, 30-year term, January 2026):
| Annual Income | Max Monthly PITI | Approximate Home Price |
|---|---|---|
| $60,000 | $1,400 | $240,000 |
| $80,000 | $1,867 | $320,000 |
| $100,000 | $2,333 | $400,000 |
| $125,000 | $2,917 | $500,000 |
| $150,000 | $3,500 | $600,000 |
Factors That Affect Your Buying Power:
- Down payment size (larger = more buying power)
- Other debts (car loans, student loans reduce available budget)
- Property taxes in your area (high-tax states reduce buying power)
- Interest rate at time of purchase
- Credit score (affects rate, which affects buying power)
Pro tip: Just because you qualify for a certain amount doesn't mean you should borrow it. Many financial advisors suggest keeping housing costs at 25% of take-home pay for financial comfort.
