Mortgage Calculator
Calculate your monthly mortgage payment, total interest, and view a full amortization schedule. Free mortgage calculator with instant results.
How It Works
A mortgage is a loan used to purchase real estate, where the property itself serves as collateral. When you borrow money to buy a home, you agree to repay the loan over a fixed period — typically 15 or 30 years — through equal monthly payments that cover both principal and interest.
Your monthly mortgage payment is determined by three core variables: the loan amount (principal), the annual interest rate, and the loan term. A larger loan amount naturally increases your payment, while a lower interest rate reduces it. Choosing a shorter loan term raises your monthly payment but dramatically cuts the total interest you pay over the life of the loan.
Understanding how your payment breaks down is essential for smart homebuying. In the early years of a mortgage, the vast majority of each payment goes toward interest rather than principal. This is because interest is calculated on the outstanding loan balance — which is highest at the beginning. Over time, as you pay down the principal, more of each payment chips away at the loan balance and less goes to interest.
The amortization schedule below shows exactly how every single payment is split between principal and interest, and how your outstanding balance decreases month by month. This transparency helps you understand the true cost of homeownership and evaluate strategies like making extra payments to pay off your mortgage early.
When comparing mortgage options, pay attention to total interest paid over the full loan term — not just the monthly payment. A 30-year mortgage at a slightly higher rate can cost tens of thousands more than a 15-year mortgage, even if the monthly payment seems more manageable.
Formula Breakdown
The standard mortgage payment formula is: M = P[r(1+r)^n] / [(1+r)^n - 1] Where: - M = Monthly payment - P = Principal loan amount (the amount you borrowed) - r = Monthly interest rate (annual rate divided by 12) - n = Total number of payments (loan term in years multiplied by 12) For example, a $400,000 loan at 6.5% annual rate for 30 years: - r = 6.5% / 12 = 0.5417% per month (0.005417) - n = 30 × 12 = 360 payments - M = 400,000 × [0.005417 × (1.005417)^360] / [(1.005417)^360 - 1] - M ≈ $2,528 per month The total amount paid over 30 years would be $2,528 × 360 = $909,960 — meaning $509,960 in interest on a $400,000 loan. This illustrates why the interest rate and loan term have such a profound impact on total borrowing cost.
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