Mortgage Calculator

How the payment is calculated

Principal and interest use the standard amortized-loan formula:M = P · r · (1+r)^n / ((1+r)^n − 1), where P is the loan amount, r is the monthly rate (APR ÷ 12), and n is the number of monthly payments. On top of that go one-twelfth of the annual property tax and homeowners insurance, any HOA dues, and — while your loan is more than 80% of the home's value — an estimated 0.5%/year of PMI. Together lenders call this PITI.

Worked example

A $400,000 home with $80,000 down (20%, so no PMI) at 6.5% over 30 years: the loan is $320,000, and principal & interest work out to about $2,023/month. Add $400 for property tax and $150 for insurance and the full payment is roughly $2,573/month. Over the life of the loan you pay about $408,000 in interest — more than the amount borrowed.

Where each dollar goes

On that loan, month 1's payment is about $1,733 interest and $290 principal. By month 180 (halfway) it is roughly $1,144 interest and $879 principal. By the final year almost all of it is principal. This is why an extra $200/month from the start pays the loan off around 5 years early and saves tens of thousands in interest — see how amortization works.

PMI, and how to drop it

With less than 20% down you'll usually pay private mortgage insurance. By federal law it must be cancelled automatically once the balance reaches 78% of the original price, and you can request it at 80% — sooner if you've made extra payments or the home has appreciated. See PMI explained.