Mortgage Calculator
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principal · interest · tax · insurance
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Principal & Interest—
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Current Mortgage Rates —
30yr Fixed~6.75%
20yr Fixed~6.50%
15yr Fixed~6.15%
5/1 ARM~6.40%
FHA 30yr~6.50%
Indicative averages for . Your actual rate depends on credit score, LTV, and lender. Always compare at least 3 lenders.
How Your Mortgage Payment is Calculated
Your monthly mortgage payment consists of four components: Principal, Interest, Taxes, and Insurance — known as PITI. The principal and interest portion is calculated using the standard amortization formula, which ensures the loan is fully paid off at the end of the term through equal monthly payments.
In the early years of a mortgage, the majority of each payment goes toward interest. Over time, as the principal balance decreases, more of each payment is applied to principal. This is why extra payments early in the loan have the greatest impact on total interest paid.
Understanding Your Results
Principal & Interest (P&I)
The core loan payment, fixed for the life of a fixed-rate mortgage. Early payments are mostly interest — by year 20 of a 30-year loan, the split reverses in favor of principal.
Total Interest Cost
On a $320,000 loan at 6.8% over 30 years, total interest exceeds $420,000 — more than the original loan. A 15-year term or extra payments dramatically change this number.
Down Payment Impact
Every extra dollar down reduces your loan and monthly payment. Reaching 20% also eliminates PMI, saving $100–300/month on most loans for the first years.
15 vs 30 Year Tradeoff
The 15-year saves tens of thousands in interest but requires ~40% higher monthly payments. Many choose 30-year for flexibility and make extra principal payments when possible.
What Affects Your Interest Rate in
Your credit score is the single biggest factor. Scores above 760 receive the best available rates — below 680, rates are typically 0.5–1.5% higher, adding tens of thousands in total interest on a standard loan. Other factors include your loan-to-value ratio (LTV), loan size, property type, and fixed vs. adjustable rate choice.
As of , 30-year fixed rates are averaging in the 6.5–7% range, having stabilized after rapid increases. Shopping at least 3 lenders before committing can save thousands — even a 0.25% rate difference on a $350,000 loan translates to over $18,000 in interest over 30 years.
Estimates only. Your actual payment may vary based on exact rate, local taxes, PMI, and lender fees. Consult a licensed mortgage professional before making decisions.
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Frequently Asked Questions
How is a monthly mortgage payment calculated step by step?+
The principal and interest payment uses the 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 ÷ 12), and n is total payments. For a $320,000 loan at 6.8% over 30 years: r = 0.00567, n = 360, giving approximately $2,093/month P&I. Property tax, insurance, HOA, and any PMI are then added for your total PITI payment.
How much house can I afford based on my salary?+
The standard guideline is the 28/36 rule: spend no more than 28% of gross monthly income on your total housing payment, and no more than 36% on all debt combined. On a $90,000 salary ($7,500/month), the 28% rule suggests a maximum payment of $2,100/month — supporting roughly a $310,000 loan at 6.8% over 30 years. Lenders also require total DTI (debt-to-income) below 43% for most conventional loans.
What is the difference between a 15-year and 30-year mortgage?+
On a $300,000 loan at 6.8%, the 30-year costs ~$1,961/month P&I and generates $406,000 in total interest. The 15-year costs ~$2,660/month but total interest is only $178,800 — a saving of $227,000. The 15-year also typically carries a rate 0.5–0.75% lower. The tradeoff is cash flow: the higher 15-year payment is locked in. A smart middle ground is taking the 30-year and making extra principal payments when possible.
How much down payment do I need to buy a house?+
Minimums by loan type: Conventional loans require as little as 3% (with PMI), and 20% eliminates PMI entirely. FHA loans require 3.5% with a 580+ credit score. VA loans (eligible veterans) and USDA loans (rural areas) allow 0% down with no PMI. Many states also offer first-time homebuyer grants of $5,000–$25,000. Budget an additional 2–5% of purchase price for closing costs on top of your down payment.
What is PMI and how do I avoid or remove it?+
Private Mortgage Insurance (PMI) is required on conventional loans when your down payment is under 20%. It typically costs 0.5–1.5% of the loan annually — $1,500–$4,500/year on a $300,000 loan. To avoid it: put 20%+ down or use a piggyback loan (80/10/10). To remove existing PMI: request cancellation when your balance reaches 80% of the original value, or get a new appraisal if your home has appreciated. Lenders must automatically cancel PMI at 78% LTV under federal law.
What credit score do I need for a mortgage?+
Minimums by loan type: Conventional loans typically require 620 (740+ for best rates), FHA accepts 580 (with 3.5% down), VA has no official minimum but most lenders require 620. The rate difference between a 620 and 760 score on a $320,000 30-year mortgage can be 1.25–1.5%, translating to $260+ more per month and over $93,000 extra in total interest. Check your credit reports at annualcreditreport.com before applying.
Does paying extra principal each month really make a big difference?+
Dramatically. On a $320,000 mortgage at 6.8% over 30 years: adding $100/month extra saves ~$38,000 in interest and cuts the term by over 3 years. Adding $300/month extra saves ~$93,000 and eliminates 8 years. The math works because extra payments reduce the principal on which future interest is calculated. Always instruct your servicer to apply extra payments to principal, not future installments.
When does refinancing a mortgage make financial sense?+
Refinancing makes sense when your break-even period is reasonable. Divide total closing costs by monthly payment savings: if costs are $7,000 and you save $220/month, break-even is 32 months. If you plan to stay beyond that, refinance. Generally a rate reduction of 0.75%+ justifies it on loans above $200,000. Also refinance to eliminate PMI if home value has risen, to switch from ARM to fixed for stability, or to shorten the term if income has grown.
What closing costs should I expect when buying a home?+
Closing costs typically run 2–5% of the loan amount. Common items: loan origination fee (0.5–1%), appraisal ($400–700), title insurance ($500–1,500), title search ($200–400), recording fees ($50–250), attorney fees where required ($500–1,500), prepaid property taxes (1–3 months), prepaid insurance (first year), and prepaid interest. On a $350,000 loan, budget $7,000–$17,500. Sellers sometimes cover part of closing costs as a negotiating concession.
Is it better to rent or buy a home right now?+
The rent vs. buy decision depends on how long you plan to stay and your local market. A useful rule: the price-to-rent ratio (home price ÷ annual rent). Below 15 favors buying; above 20 typically favors renting short-term. With mortgage rates around 6.8% in and elevated prices in many markets, renting is financially advantageous in major cities if you plan to stay fewer than 5–7 years. Buying makes more sense with a 7+ year horizon, stable income, and a market with strong appreciation prospects.