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.
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 up front 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 = 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 = 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 = 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 = the national average.)
- Homeowners insurance: Your annual cost to insure your home and personal 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 = 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.
Which Costs Are 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. Though 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 Can I Calculate My Monthly Mortgage Payment?
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:
M=[(1+i)n−1]P[(1+i)n]where:P=Principal loan amount (the amount you borrow)i=Monthly interest raten=Number of months required to repay the loan
Lenders usually list interest rates as an annual amount. To determine the monthly rate, divide the annual amount by 12. So, if your rate is 6%, the monthly rate would be 0.06/12 = 0.005.
How Can I 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:
Monthly Interest=12Loan Balance×Interest Rate
For example, say you have a $150,000 loan balance with a 5% interest rate. Your interest payment for the month would be:
12($150,000×0.05), or 12$7,500=$625.00
Remember that your balance changes each month after you make a mortgage payment. Be sure to use the new balance to calculate the next month's interest.
The interest rate for fixed-rate mortgages remains the same for the entire loan term. With adjustable-rate mortgages (ARMs), the interest rate changes periodically based on prevailing interest rates.
What Is the Average Interest Rate on a Mortgage?
Mortgage interest rates are influenced by various economic factors, including:
- The level of economic growth
- Federal Reserve monetary policy
- The bond market
- Housing market conditions
Here are the average monthly rates for 30-year fixed rate mortgages from 2010–2020, according to the Federal Reserve Bank of St. Louis:
Image source: Federal Reserve Bank of St. Louis.
Of course, the interest rate you see at the closing table could be higher or lower than the average rate. That's because your interest rate depends on what's happening in the economy at large—plus individual factors, such as your:
- Credit score
- Home price and loan amount
- Down payment
- Loan term
- Interest rate type (fixed or adjustable)
- Loan type
How Much House Can I Afford?
One of the key metrics lenders look at to determine how much house you can afford is your debt-to-income ratio (DTI)—the percentage of your gross monthly income that goes toward paying your monthly debt payments. A low DTI demonstrates that you have a good balance between debt and income, while a high DTI signals that your debt may be too high for your income.
In general, 43% is the highest DTI you can have and still qualify for a mortgage. Most lenders, however, prefer DTIs that are no higher than 36%, with housing expenses (including your mortgage payment) representing no more than 28% of that debt (the "28/36 rule").
Another factor that determines how much house you can afford is the amount of money you have available to make a down payment and cover closing costs. Though a larger down payment might mean a bigger mortgage (and more house), make sure you'll have money left over to furnish the home and live in it.
Of course, just because a lender approves you for a loan doesn't mean you have to borrow the entire amount. A smaller loan payment provides some wiggle room each month, which might come in handy in an emergency or if something unexpected comes up (say, a pandemic). A lower payment also makes it easier to save for other goals and work on your retirement nest egg.
It's illegal for lenders to discriminate based on race, religion, sex, marital status, use of public assistance, national origin, disability, or age. If you believe a lender has discriminated against you, you can file a report with the Consumer Financial Protection Bureau and/or the U.S. Department of Housing and Urban Development (HUD).
How Can a Mortgage Payment Calculator Help Me?
A mortgage calculator can be an indispensable tool if you're considering financing a home purchase. That's because a good mortgage calculator:
- Helps you estimate your monthly mortgage payment. A mortgage calculator shows what your monthly payment might look like. This is an important first step in the homebuying process.
- Factors in other home costs. A good mortgage calculator factors in not only principal and interest, but also additional home costs like taxes, home insurance, private mortgage insurance, and homeowners' association dues. Knowing these costs helps you determine a home price you can realistically afford.
- Narrows your home search. Mortgage payment estimates provide a good starting point for your home search. Instead of spending time looking at properties outside of your price range, you can focus on homes that match your budget. In general, you should never buy a home that's above your price range. Of course, it's not a good idea to buy too far below your price range either, if doing so means you'll probably have to sell and buy again in a few years.
- Allows you to try out different scenarios. With a mortgage calculator, it's easy to change one or more inputs to see how it affects your monthly payment, mortgage interest, and the total cost of the loan. This is an easy way to figure out your optimal loan.
- Shows how different loan types compare. A calculator does the math for you, so you can quickly analyze different loan types. For example, a 30-year fixed-rate mortgage has lower payments, but you'll end up paying more in interest. A 15-year loan has higher payments, but you'll pay less interest over the life of the loan.
How Can I Choose the Best Mortgage?
If you're like most people, a mortgage represents the largest long-term debt obligation you'll ever have. Choosing the right mortgage can set you up for success and help minimize the overall costs of buying the home. Here are four tips to help you shop for the best mortgage:
1. Determine how much you can afford. A home is a large purchase, and you may wonder how much you can realistically afford. Try various scenarios on a mortgage calculator to find out what your optimal loan might look like. No matter how much loan you qualify for, keep in mind that you don't have to borrow the entire amount.
2. Compare mortgage loan term lengths. A 30-year fixed-rate mortgage is the most popular loan type, but it's not your only option. Use a mortgage calculator to see how various loan terms impact your monthly payment, the amount of interest you'll pay, and the total cost of the home. Remember, a longer loan term means lower monthly payments, but you'll end up paying more interest over the life of the loan. This chart compares how monthly payments and total interest differ for a fixed-rate $250,000 loan at 4%, depending on the loan term:
|Loan Term||Monthly Payment||Total Interest||Total Cost|
3. Choose the right mortgage type. A conventional loan isn't the only type of mortgage out there, and choosing the right mortgage type might come down to your situation. For example, if you have a military connection, a VA loan might be a good option. Do you live in a rural or suburban area? A USDA loan could be a good fit. Borrowers with lower credit scores might benefit from FHA loans. And if you need a mortgage that's larger than standard loan guidelines allow, a jumbo loan is your best bet.
4. Shop around. A mortgage is a substantial financial commitment, so now is not the time to go with the first available option. No matter which type of mortgage you're in the market for, it pays to shop around. Remember that tiny differences in interest rates can lead to significant changes in your monthly payment and the total amount of interest you'll pay. Be sure to try out different scenarios on a mortgage calculator to find your optimal loan. And of course, compare at least four lenders to find one that has the terms, choices, and services that work best for you.
International Insurance Institute. "Can I Own a Home Without Homeowners Insurance?"
Consumer Financial Protection Bureau. "What Is Private Mortgage Insurance?"
Consumer Financial Protection Bureau. "Are Condo/Co-op Fees or Homeowners’ Association Dues Included in My Monthly Mortgage Payment?"
Federal Reserve Bank of St. Louis. "30-Year Fixed Rate Mortgage Average in the United States."
Consumer Financial Protection Bureau. "What Is a Debt-to-Income Ratio? Why Is the 43% Debt-to-Income Ratio Important?"
FDIC. "Loans and Mortgages."