Buying a home is the largest financial decision most people make in their lifetime — and the monthly mortgage payment is only the beginning of the story. The real numbers that matter are the total interest paid over the life of the loan, the true cost of different down payment amounts, and how small changes in interest rate or loan term dramatically affect what you pay over 15 to 30 years.
This mortgage calculator gives you an instant monthly payment estimate and a full amortization breakdown — showing exactly how much of each payment goes toward principal versus interest, and how that ratio shifts over time.
How a Mortgage Payment is Calculated
Your monthly mortgage payment has four components, commonly abbreviated as PITI:
Principal is the portion of your payment that reduces the actual loan balance. In the early years of a mortgage, this is a surprisingly small share of your total payment.
Interest is the cost of borrowing. In the early years, most of your payment is interest — not equity. On a $350,000 loan at 6.8%, your first payment of roughly $2,283 includes about $1,983 in interest and only $300 in principal reduction.
Taxes are your annual property taxes divided by 12, collected monthly by your lender and held in escrow until due. Property tax rates vary significantly by state and county — from under 0.3% of home value annually in Hawaii to over 2% in states like New Jersey and Illinois.
Insurance includes homeowner’s insurance (typically $100–$200/month for a median-value home) and, if your down payment is under 20%, private mortgage insurance (PMI). PMI typically adds 0.5–1.5% of the loan amount annually until your loan-to-value ratio reaches 80%.
The formula for the principal and interest portion of your monthly payment is:
M = P × [r(1+r)^n] ÷ [(1+r)^n − 1]
Where M is the monthly payment, P is the loan principal, r is the monthly interest rate (annual rate divided by 12), and n is the total number of payments (loan term in years multiplied by 12).
How Interest Rate Affects Your Payment
Even a 0.5% difference in interest rate has a significant impact on both your monthly payment and total interest paid. On a $350,000 loan over 30 years:
- At 6.0%: monthly payment of $2,098 — total interest of $405,000
- At 6.5%: monthly payment of $2,213 — total interest of $446,000
- At 7.0%: monthly payment of $2,329 — total interest of $489,000
- At 7.5%: monthly payment of $2,448 — total interest of $531,000
A 1.5% rate difference on the same loan produces a $350 monthly payment gap and over $126,000 more in total interest over the life of the loan. This is why even a fraction of a percent improvement in your credit score before applying — which directly influences the rate you’re offered — can have five-figure consequences.
15-Year vs. 30-Year Mortgage: The Real Tradeoff
The 30-year fixed mortgage is the most common in the US because it offers the lowest monthly payment. But the 15-year mortgage builds equity faster and costs dramatically less in total interest.
On a $350,000 loan at 6.5%:
- 30-year: $2,213/month — total interest paid: $446,000
- 15-year: $3,051/month — total interest paid: $199,000
The 15-year option costs $838 more per month but saves $247,000 in interest. For buyers who can afford the higher payment, the 15-year mortgage is often the better long-term financial decision — especially since 15-year rates are typically 0.5–0.75% lower than 30-year rates.
The Impact of Extra Principal Payments
One of the most powerful and underutilized mortgage strategies is making extra principal payments. Because mortgage interest is calculated on the remaining balance, any extra payment directly reduces future interest charges.
Adding $200/month in extra principal to a $350,000 30-year mortgage at 6.8%:
- Cuts the loan term from 30 years to approximately 25 years
- Saves approximately $90,000 in total interest
- Requires no refinancing, no fees, and no lender approval
Even a single extra payment per year — achieved by paying half your monthly payment every two weeks (bi-weekly payments) — shaves 4–5 years off a 30-year mortgage and saves tens of thousands of dollars in interest.
Frequently Asked Questions
How much house can I afford based on my income?
A widely used guideline is that your monthly housing costs (principal, interest, taxes, and insurance) should not exceed 28% of your gross monthly income. On a $90,000 annual salary ($7,500/month gross), that is $2,100/month for housing. At current rates, that translates to a loan of approximately $320,000–$340,000 depending on your down payment, taxes, and insurance costs.
What is a good mortgage interest rate?
In 2025, the average 30-year fixed rate hovers around 6.5–7.0% for borrowers with strong credit. Borrowers with credit scores above 760 and debt-to-income ratios below 36% typically qualify for rates at or below the market average. Improving your credit score by even 20–40 points before applying can meaningfully reduce the rate you’re offered.
What is PMI and when can I stop paying it?
Private mortgage insurance (PMI) is required when your down payment is less than 20% of the home’s purchase price on a conventional loan. PMI protects the lender, not you, and typically costs 0.5–1.5% of the loan amount annually. You can request cancellation once your loan balance reaches 80% of the original appraised value, and lenders are required by law to cancel it automatically at 78% LTV.
Should I choose a fixed or adjustable rate mortgage?
A fixed-rate mortgage keeps the same interest rate for the entire loan term. An adjustable-rate mortgage (ARM) typically offers a lower initial rate for a fixed period (commonly 5 or 7 years), then adjusts periodically based on a market index. ARMs can make sense if you plan to sell or refinance before the initial fixed period ends. If you plan to stay in the home long-term, a fixed rate provides payment certainty that most buyers value highly.
How does a down payment affect my mortgage?
A larger down payment reduces your loan amount, which lowers your monthly payment and total interest paid. It also eliminates PMI if you reach 20% down. The optimal down payment depends on your cash reserves, other financial goals, and the current return environment.
What is an amortization schedule?
An amortization schedule shows exactly how each monthly payment is split between principal and interest over the life of your loan. In the early years, the majority of each payment is interest. As the loan balance decreases, more of each payment shifts toward principal. This is why homeowners who sell in the first 5–7 years of a 30-year mortgage have paid far more interest than principal — and why building equity through homeownership takes longer than most people expect.
Calculate your monthly mortgage payment, total interest, and total cost. Enter your loan details below.
How to Calculate Your Mortgage Payment
Your monthly payment depends on the loan amount (price minus down payment), the interest rate, and the loan term.
Frequently Asked Questions
How much house can I afford?<\/strong>
A common guideline is to keep your monthly mortgage payment below 28% of your gross monthly income.
What is a good mortgage interest rate?<\/strong>
Rates vary by market conditions and credit score. Compare offers from multiple lenders for the best rate.
Should I choose a 15-year or 30-year mortgage?<\/strong>
A 15-year mortgage has higher payments but far less total interest. A 30-year has lower payments but more interest.
How much house can I afford?
A common guideline is to keep your monthly mortgage payment below 28% of your gross monthly income.
What is a good mortgage interest rate?
Rates vary by market conditions and credit score. Compare offers from multiple lenders for the best rate.
Should I choose a 15-year or 30-year mortgage?
A 15-year mortgage has higher payments but far less total interest. A 30-year has lower payments but more interest.
How to calculate your monthly mortgage payment using this free calculator.
Enter the home price
Type the total purchase price of the home in the Home Price ($) field.
Enter the down payment
Type the amount you will pay upfront. Enter 0 if no down payment.
Enter the annual interest rate
Type the annual interest rate as a percentage, for example 6.5 for 6.5%.
Enter the loan term
Type the number of years for the loan, for example 30 for a 30-year mortgage.
Click Calculate
Your monthly payment, total amount paid, and total interest will appear instantly below the button along with a chart.
Our sources
The monthly payment uses the standard amortization formula shown above; rate scenarios reflect published averages from Freddie Mac’s Primary Mortgage Market Survey. We don’t fetch live rates — enter yours and compare with a lender. Related: Affordability · Refinance · Down Payment.
Estimates only; taxes, insurance and PMI vary. Not financial advice.