Mortgage Calculator

A mortgage is a long-term loan used to buy property, repaid in fixed monthly instalments over a term that is often 15 to 30 years. Your monthly payment depends on the amount borrowed (the home price minus your down payment), the interest rate and the loan term.

This calculator estimates the principal-and-interest portion of your mortgage payment and the total interest paid over the full term. Property tax, home insurance, mortgage insurance and HOA fees can be added in the optional section below the inputs to see the full monthly cost; closing costs and maintenance are one-off or variable enough that they are left for you to budget separately.

The main figure above is principal and interest, the part that repays the loan itself. It's the number lenders quote, but it isn't what leaves your account each month. In the US the full monthly cost is usually described as PITI: principal, interest, taxes and insurance, and several other costs sit alongside it. The optional section above the results lets you add four of them so the "Total monthly cost" line reflects what you would actually pay; the other two (closing costs and maintenance) are either one-off or too variable to model, so they're described here instead.

• Property tax: billed annually but normally collected monthly into an escrow account. Commonly 0.5% to 2.5% of the property value a year depending on the state or council area. Enter it as a percentage of price in the optional section.
• Homeowners insurance: required by every lender, and usually escrowed alongside the tax. Enter the annual premium in the optional section.
• Mortgage insurance: in the US, PMI is typically required when the down payment is under 20%, and continues until the loan-to-value ratio falls to roughly 80%. Tick the PMI box in the optional section to add it; the calculator never assumes it for you.
• HOA or service charges: common on condominiums, apartments and managed developments, and not always visible in the listing price. Enter the monthly charge in the optional section.
• Closing costs: commonly 2% to 5% of the loan amount in the US, paid upfront rather than monthly. Not modelled here since it is a one-off, not a monthly figure.
• Maintenance: a widely used rule of thumb is 1% of the property value a year, and older properties run higher. Left out because it varies too much by property age and condition to give a single honest default.

If you skip the optional section, the true monthly cost is typically understated by 25% to 40%. It's worth filling in before you treat any affordability figure as more than a starting point.

Interest is charged on whatever you still owe, and at the start of a mortgage that's at its highest. Every payment is the same size, but the split between interest and principal shifts steadily over the years.

On a $280,000 loan at 6.5% over 30 years, the first payment of about $1,770 divides into roughly $1,517 of interest and $253 of principal, so only about 14% of it actually reduces the debt. The crossover, where more of each payment goes to principal than to interest, doesn't come until around year 19.

• Overpaying early does a surprising amount of good, because every extra dollar comes straight off the balance that all future interest is charged on.
• Selling or refinancing in the first few years leaves you with far less equity than the number of payments made would suggest.
• Shortening the term cuts total interest much more than it raises the monthly payment, which is why a 15-year loan costs so much less overall.

The amortization chart in the calculator above plots this crossover for the numbers you enter.

A fixed-rate mortgage holds the same interest rate for the whole term, so the payment shown here is the payment for 30 years. An adjustable-rate mortgage (an ARM in the US, a tracker or discounted variable in the UK) starts lower and then moves with a reference rate once an initial fixed period of typically 5, 7 or 10 years ends. Historically around 70% to 75% of US buyers have chosen fixed-rate loans.

• Fixed: predictable for budgeting, and protected if rates rise. You pay a premium for that certainty, and you have to refinance to benefit if rates fall.
• Adjustable: a lower starting rate, which can pay off if you expect to sell or refinance before the fixed period ends. The risk is that the payment resets upward at exactly the wrong moment.

This calculator models a fixed rate. If you're thinking about an adjustable loan, run it a second time at the highest rate your loan could reset to, not the introductory rate, because that's the payment you need to be able to afford.