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Interactive calculators for mortgage payments, with real-time amortization charts and schedules.

Mortgage Calculator

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Enter your home price and rate, then click Calculate

Comprehensive Mortgage Guide & Calculator Reference

How Mortgage Payments Are Calculated

When you purchase a home with a mortgage, your monthly payment consists of more than just paying back the money you borrowed. Most home loans are structured as "PITI" payments, which stands for Principal, Interest, Taxes, and Insurance:

Principal: The actual portion of the payment that goes toward reducing the outstanding balance of your loan.

Interest: The cost charged by the lender for borrowing the money, calculated as a percentage of the remaining principal.

Property Taxes: Annual taxes levied by your local government, usually collected monthly by the lender and held in an escrow account to be paid on your behalf.

Home Insurance: Protection for your home against damages (fire, hazards). Like taxes, this is typically collected monthly into escrow.

In the early years of a mortgage, the majority of your payment goes toward interest. Over time, as the principal balance decreases, a larger share of each payment goes toward paying down the principal. This process is called amortization.

Amortization Formula
M = P × [ r(1+r)n ] / [ (1+r)n - 1 ]
Where:
• M = Total monthly principal & interest payment
• P = Principal loan amount (Home price minus down payment)
• r = Monthly interest rate (Annual rate / 12 months)
• n = Total number of payments (e.g., 360 payments for a 30-year loan)

Frequently Asked Questions (FAQ)

What is the 28/36 debt rule?
Lenders use this rule to determine how much you can borrow. It states that your housing expenses (PITI) shouldn't exceed 28% of your gross monthly income, and your total debt payments (housing + credit cards + car loans) shouldn't exceed 36% of your income.
How does my down payment affect my mortgage?
A larger down payment lowers your loan amount, which reduces your monthly payment and total interest paid. Additionally, putting down at least 20% helps you avoid paying Private Mortgage Insurance (PMI), which is an extra fee lenders charge to protect themselves.
Should I choose a 15-year or 30-year term?
A 30-year mortgage offers lower, more manageable monthly payments but costs significantly more in total interest over the life of the loan. A 15-year mortgage has higher monthly payments but lets you pay off the home faster and saves you tens of thousands of dollars in interest.
What is an escrow account?
An escrow account is a neutral holding account managed by your mortgage lender. They collect a portion of your monthly payment to cover property taxes and home insurance, then pay those bills for you when they are due.