account_balance Mortgage Payment Calculator

How the Mortgage Payment Calculator Works

A mortgage payment has two parts: principal and interest, plus the escrow items your lender collects each month. Principal and interest come from the standard loan 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 rate and n is the number of payments. Property tax and home insurance are added as one-twelfth of their annual amounts, and PMI and HOA dues are added on top when they apply.

Example: a $400,000 home with 20% down ($80,000) means a $320,000 loan. At 6.5% over 30 years, principal and interest are $2,022.62 a month. Add $4,800 a year of property tax ($400 a month) and $1,800 a year of insurance ($150 a month) and the total is $2,572.62 a month. Over the life of the loan you pay $408,142.36 in interest, and $926,142.36 in total including tax and insurance. In the first year, $20,694.69 goes to interest and only $3,576.72 to principal — the balance falls slowly at first, then faster.

A 15-year term costs more each month but far less overall. The same $320,000 loan at 6.5% over 15 years costs $2,787.54 a month in principal and interest, but total interest drops to $181,757.84 — a saving of about $226,385 versus the 30-year loan. That is why buyers who can afford the higher payment often choose the shorter term.

Frequently Asked Questions

More Finance Tools

Looking for a Different Tool