Mortgage Calculator

How to Use This Mortgage Calculator

1. Enter the Home Price — the full purchase price of the property. For example, the median U.S. home price in 2025 is roughly $400,000.
2. Enter your Down Payment — the cash you pay upfront. A 20% down payment on a $350,000 home is $70,000. Putting down less than 20% usually triggers Private Mortgage Insurance (PMI), which adds to your monthly cost.
3. Select a Loan Term — 30-year loans have lower monthly payments but more total interest; 15-year loans save significantly on interest but require higher monthly payments.
4. Enter the Interest Rate — check current rates from your lender or sites like Freddie Mac’s Primary Mortgage Market Survey. Even a 0.5% difference can save tens of thousands over the life of a loan.
5. Results update instantly as you type, including the full amortization schedule below.

Example: $350,000 Home with 20% Down

15-Year vs. 30-Year Mortgage

One of the most impactful choices a homebuyer makes is the loan term. Here’s a side-by-side comparison using a $280,000 loan at 6.5%:

The 30-year loan costs $670 less per month, but you pay almost $198,000 more in interest over the life of the loan. If you can afford the higher payment, a shorter term saves a substantial amount.

Monthly Payment Formula Explained

Understanding Amortization

Amortization is the process of spreading your loan into a series of fixed payments over time. With each payment, a portion goes toward interest and the rest reduces your principal balance. If you’re curious about how interest compounds on savings or investments, check out our compound interest calculator.

In the early years of a 30-year mortgage, roughly 70–80% of each payment is interest. By year 20, the split reverses and most of your payment goes toward principal. This is why making extra payments early in the loan has a dramatic impact on total interest.

Types of Mortgages

Not every mortgage works the same way. The most common options include:

• Fixed-Rate Mortgage: The interest rate stays the same for the entire loan term, making monthly payments predictable. This is the most popular choice for homebuyers who want stability.
• Adjustable-Rate Mortgage (ARM): The rate is fixed for an initial period (typically 5, 7, or 10 years) and then adjusts annually based on a benchmark index. ARMs usually start with a lower rate than fixed loans, but carry the risk of higher payments later.
• FHA Loan: Backed by the Federal Housing Administration, FHA loans allow down payments as low as 3.5% and are more lenient on credit scores. They require mortgage insurance for the life of the loan.
• VA Loan: Available to eligible veterans and active-duty military, VA loans offer zero down payment and no PMI requirement.
• USDA Loan: For homes in eligible rural areas, USDA loans offer zero down payment and competitive rates.
• Jumbo Loan: For home prices exceeding conforming loan limits ($766,550 in most areas for 2025), jumbo loans typically require higher credit scores and larger down payments.

Biweekly Payment Strategy

Instead of making 12 monthly payments per year, you split each payment in half and pay every two weeks. Because there are 52 weeks in a year, you end up making 26 half-payments — equivalent to 13 full monthly payments. That one extra payment per year goes straight to principal.

On a $280,000 loan at 6.5% for 30 years, switching to biweekly payments would save roughly $67,000 in interest and shave about 5–6 years off the loan. Most lenders or third-party services can set this up for you, or you can simply add 1/12 of your monthly payment as extra principal each month for the same effect.

When Should You Refinance?

Refinancing replaces your existing mortgage with a new one, typically to secure a lower interest rate. A common rule of thumb: refinancing makes sense when you can reduce your rate by at least 0.75–1%, plan to stay in the home long enough to recoup closing costs (usually 2–4 years), and your credit score has improved since you first bought. Use our loan payoff calculator to compare your current payoff timeline with a refinanced loan.

Cash-out refinancing lets you borrow against your home equity. This can fund renovations or consolidate high-interest debt, but it increases your loan balance and resets the amortization clock. Evaluate whether the long-term cost justifies the short-term benefit using a debt-to-income calculator to make sure you stay within safe ratios.

Tips for Getting a Better Mortgage Rate

• Boost your credit score: Borrowers with scores above 740 typically get the best rates. Pay down credit card balances and avoid opening new accounts before applying.
• Save for 20% down: This eliminates PMI (typically 0.5–1% of the loan per year) and often unlocks lower rates.
• Shop multiple lenders: Get quotes from at least 3–5 lenders. According to Freddie Mac, borrowers who get five quotes save an average of $3,000 over the life of the loan.
• Consider points: Paying “discount points” upfront (1 point = 1% of loan amount) can lower your rate by about 0.25%. This makes sense if you plan to stay in the home long enough to break even.
• Lock your rate: Once you find a good rate, lock it in. Rate locks typically last 30–60 days and protect you from market fluctuations during closing.
• Choose a shorter term: 15-year mortgages generally carry rates 0.5–0.75% lower than 30-year loans.

Costs Beyond the Monthly Payment

Your mortgage payment is only part of the total cost of homeownership. Be sure to budget for:

• Property taxes: The U.S. average is about 1.1% of home value per year, but it varies widely by state (0.3% in Hawaii to over 2% in New Jersey).
• Homeowner’s insurance: Typically $1,500–$3,000 per year depending on location and coverage.
• PMI: Required if your down payment is less than 20%. Usually 0.5–1% of the loan per year, removable once you reach 20% equity.
• HOA fees: Common for condos and planned communities, ranging from $100 to $500+ per month.
• Maintenance: Budget 1–2% of the home value per year for repairs and upkeep.

Frequently Asked Questions