How this mortgage calculator works
Your monthly housing payment is usually more than just the loan repayment. This calculator adds up the main parts, often called PITI:
- Principal & interest – the loan repayment itself, calculated with the standard amortization formula.
- Property tax – entered as a yearly percentage of the home price and split into 12 monthly amounts.
- Home insurance – your yearly premium divided by 12.
- PMI – private mortgage insurance, added automatically when your down payment is under 20%.
- HOA fees – monthly homeowners’ association charges, if any.
Mortgage payment formula
M = P × r × (1 + r)n ÷ [(1 + r)n − 1]
Where P is the loan amount (home price minus down payment), r is the monthly interest rate and n is the number of monthly payments (years × 12).
Example
A 400,000 home with 20% down means a loan of 320,000. At 6.5% over 30 years, principal and interest come to about 2,023 a month. Add 1.1% property tax (≈367/month) and 1,500 a year of insurance (125/month) and the full payment is about 2,514 a month.
15-year vs 30-year mortgage
A 15-year loan has a much higher monthly payment but usually a lower rate, and you pay far less interest overall. A 30-year loan keeps payments affordable but costs more over time. Try both terms above to compare total interest.
How extra payments help
Any extra amount you pay each month goes straight to principal. Even a small extra payment can cut years off your mortgage and save a large amount of interest. Open Taxes, insurance, PMI & extra payments and enter an extra monthly amount to see your new payoff date.
How much house can I afford?
A common rule of thumb is to keep your total housing payment below about 28% of your gross monthly income, and all debt payments below about 36%. Lenders in different countries use different limits, so treat this as a starting point.