🏠 Mortgage Calculator
Educational mortgage calculator for learning about home loans, monthly payments, amortization schedules, and total interest costs. Mathematical tool for educational purposes only - not financial advice
How to Use This Mortgage Calculator
How to Calculate Mortgage Payments:
- Enter your desired loan amount (home price minus down payment)
- Input your down payment amount (typically 10-20% of home price)
- Set the annual interest rate offered by your lender
- Choose your loan term (15, 20, 25, 30, or 40 years)
- Add property taxes, home insurance, and PMI rate
- Optionally include HOA fees and extra monthly payments
- Check boxes to see amortization schedule and loan comparisons
- Use quick scenario buttons for common mortgage situations
Pro Tips: Try different down payment amounts to see PMI impact. Use extra payments to see how much interest you can save and how many years you can cut off your mortgage!
How It Works
The Mathematics of Mortgage Calculations:
Mortgage payments use compound interest formulas to ensure equal monthly payments over the loan term:
- Monthly Payment Formula: M = P × [r(1+r)^n] / [(1+r)^n - 1]
- Where: M = Monthly payment, P = Principal (loan amount), r = Monthly interest rate, n = Total payments
- PMI Calculation: Applied when down payment is less than 20% of home value
- PITI Breakdown: Principal, Interest, Taxes, Insurance make up your total payment
- Amortization: Early payments are mostly interest, later payments are mostly principal
- Extra Payments: Go directly to principal, reducing total interest and loan term
Our calculator handles leap years, exact day calculations, and provides detailed breakdowns to help you understand the true cost of homeownership.
When You Might Need This
- • Understanding monthly payment components (principal, interest, taxes, insurance)
- • Comparing different down payment amounts and their impact on PMI
- • Learning about FHA loans and conventional loan requirements
- • Refinancing analysis and break-even calculations
- • Extra payment strategies to pay off mortgages faster
- • Client education and payment scenario modeling
Frequently Asked Questions
How is my monthly mortgage payment calculated?
Your monthly payment includes four main components: Principal (loan repayment), Interest (cost of borrowing), Property Taxes (local government taxes), and Insurance (homeowner's and possibly PMI). This is often called PITI. Our calculator shows the breakdown of each component.
What is PMI and when do I need it?
Private Mortgage Insurance (PMI) is required when your down payment is less than 20% of the home's value. PMI protects the lender if you default on the loan. You can typically remove PMI when you've paid down 20% of the original loan amount or your home has appreciated in value.
How do points affect my mortgage?
Mortgage points are upfront fees paid to reduce your interest rate. One point typically costs 1% of your loan amount and reduces your rate by 0.25%. Points make sense if you plan to stay in the home long enough for the monthly savings to exceed the upfront cost.
When should I consider refinancing?
Consider refinancing when rates drop significantly (typically 0.5-1% or more), your credit improves, you want to change loan terms, or you need cash out. Factor in closing costs and how long you plan to stay in the home to determine if refinancing makes financial sense.