A mortgage is likely the largest loan you will ever take on, and even a small difference in rate or term can change what you pay by tens of thousands of dollars. This mortgage calculator turns the four numbers that matter most — home price, down payment, interest rate, and loan term — into a clear monthly payment and a complete picture of what the loan actually costs you over its lifetime.
How this calculator works
Enter the home price and your down payment to set the loan amount (price minus down payment). Add the annual interest rate your lender quoted and choose a term, usually 15 or 30 years. The calculator computes your principal-and-interest payment, then adds estimated property taxes and homeowner's insurance so the number you see is closer to your real monthly obligation rather than just the loan portion.
The formula behind your payment
Monthly principal and interest follows the standard amortization formula: M = P · [r(1+r)^n] / [(1+r)^n − 1], where P is the loan amount, r is the monthly interest rate (annual rate divided by 12), and n is the total number of monthly payments (years × 12). Because interest is charged on the remaining balance, your early payments are mostly interest and your later payments are mostly principal — which is why an amortization schedule looks so lopsided at the start.
A worked example
Suppose you buy a $400,000 home with 20% down ($80,000), leaving a $320,000 loan at 6.5% over 30 years. The monthly principal and interest works out to roughly $2,022. Over the full 30 years you would pay about $408,000 in interest alone — more than the original loan. Shorten the term to 15 years and the payment rises to about $2,787, but total interest drops to roughly $181,000, saving you well over $200,000.
Tips to lower what you pay
- Put down 20% when you can to avoid private mortgage insurance (PMI), which adds to your payment without building equity.
- Compare a 15-year term against a 30-year term — the higher payment often comes with a lower rate and far less lifetime interest.
- Even one extra payment per year shortens a 30-year loan by several years and saves thousands in interest.
- Shop at least three lenders; rate quotes vary more than most buyers expect, and a 0.25% difference is real money over decades.
How rate and term change the real cost of a $400,000 loan
The table below shows the principal-and-interest payment and the total interest paid on a $400,000 loan at three common rates, for both 30-year and 15-year terms. Taxes, insurance, and PMI are not included, so your full housing payment will be higher. The figures come from the same standard amortization formula this calculator uses.
| Rate | 30-yr payment | 30-yr total interest | 15-yr payment | 15-yr total interest |
|---|---|---|---|---|
| 6.0% | $2,398 | $463,353 | $3,375 | $207,577 |
| 6.5% | $2,528 | $510,178 | $3,484 | $227,197 |
| 7.0% | $2,661 | $558,036 | $3,595 | $247,156 |
Two lessons jump out. First, each half-point of rate adds roughly $130 a month and close to $50,000 of lifetime interest on a 30-year loan of this size, which is why shopping several lenders is worth an afternoon of phone calls. Second, the 15-year loan costs about $1,000 more per month but cuts total interest by more than half. If the higher payment fits comfortably, the shorter term is one of the most powerful wealth-building moves available to a homeowner.
Worked example: what extra payments really save
Take a $320,000 loan at 6.5% for 30 years. The required payment is about $2,023 a month, and if you make only that payment you will pay roughly $408,000 in interest. Now see what happens when you add a fixed amount to principal every month:
| Extra per month | Payoff time | Interest saved |
|---|---|---|
| $0 | 30 years | — |
| $100 | 26 years 2 months | about $61,700 |
| $200 | 23 years 5 months | about $105,400 |
| $500 | 18 years | about $185,600 |
An extra $200 a month, about the cost of a couple of dinners out, removes more than six years of payments. The savings are front-loaded because every extra dollar in the early years stops interest from compounding on it for decades. Before prepaying, confirm your loan has no prepayment penalty, keep an emergency fund in place, and make sure you are capturing any employer retirement match first, since that match is usually a better guaranteed return.
Common mistakes to avoid
- Budgeting on principal and interest alone. Property tax, homeowners insurance, HOA dues, and PMI can add 25–40% to the payment.
- Comparing loans by rate only. Compare the APR and the lender’s Loan Estimate, which includes points and fees.
- Stretching to the maximum a lender approves. Approval limits are based on ratios, not on your other goals like retirement or childcare.
- Forgetting maintenance. A common rule of thumb is to set aside 1–2% of the home’s value each year for repairs.