Mortgage Calculator

Introduction

A mortgage is one of the largest financial commitments most people make. This Mortgage Calculator helps you quickly estimate monthly payments, total interest paid over the life of the loan, and view a simple amortization overview. Use the calculator to compare loan terms, test different interest rates, and plan your budget before applying for a mortgage.

How this calculator works

This tool calculates your monthly payment using a standard amortizing loan formula. It assumes fixed interest rate and fixed monthly payments over the loan term.

Formula used (fixed-rate mortgage):
Monthly payment = P × r × (1 + r)^n / ((1 + r)^n − 1)
Where:

• P = loan principal (amount borrowed)

• r = monthly interest rate (annual rate ÷ 12 ÷ 100)

• n = total number of monthly payments (years × 12)

Example (worked calculation)

Suppose you borrow $200,000 at an annual interest rate of 4% for 30 years.

1. Convert annual rate to monthly: r = 4 / 100 / 12 = 0.003333…

2. Total payments: n = 30 × 12 = 360

3. Apply formula:

Monthly payment ≈ 200,000 × 0.003333 × (1.003333)^360 / ((1.003333)^360 − 1) ≈ $954.83

Over 30 years you would pay total = $954.83 × 360 = $343,738.80, of which interest ≈ $143,738.80.

Step-by-step usage guide

1. Enter loan amount (principal) — the amount you plan to borrow after down payment.

2. Enter annual interest rate (%) — use the expected mortgage rate (e.g., 3.5, 4.0).

3. Enter loan term (years) — common terms: 15, 20, 30 years.

4. Optional: Extra monthly payment — if you want to pay off the loan faster, enter additional monthly contributions.

5. Click Calculate to see monthly payment, total payment, and total interest. If your calculator provides an amortization schedule, review the early years to see how interest vs principal changes.

Practical tips and considerations

• Down payment matters. Lower loan principal = lower monthly payments. Consider making a larger down payment to lower interest costs.

• Compare loan terms. Shorter terms (e.g., 15 years) produce higher monthly payments but much lower total interest.

• Watch the APR. Mortgage offers may show different APRs reflecting fees — use APR for apples-to-apples comparisons.

• Prepayment and penalties. Verify if your lender charges prepayment penalties before paying extra.

• Adjust for taxes & insurance. This calculator returns principal & interest only. Add property taxes, homeowners insurance, and HOA fees to estimate full monthly housing cost.

Amortization & what it shows

An amortization schedule breaks down each monthly payment into interest and principal. Early payments are mostly interest; later payments reduce principal faster. Use the schedule to plan refinancing or extra payments.

Common mistakes

• Using the wrong interest rate type (make sure you use the nominal annual fixed rate).

• Forgetting to include taxes and insurance when planning monthly affordability.

• Assuming the mortgage rate will remain constant for adjustable-rate mortgages (ARM).

FAQs

Q: Does this include taxes and insurance?
A: No. This calculator computes principal and interest only. Add property taxes, homeowners insurance, and HOA fees separately for a full monthly cost estimate.

Q: Can I calculate bi-weekly payments?
A: This calculator returns monthly payments. For bi-weekly payments, divide the monthly payment by two and schedule extra payments or use a bi-weekly specific calculator.

Q: How much will extra payments save me?
A: Adding a small extra monthly payment reduces principal faster and can shorten the term and save thousands in interest. Try adding an extra amount in the calculator if available.

Q: Does this assume a fixed rate?
A: Yes. For adjustable-rate mortgages, results will differ as rates change over time.

Limitations & legal disclaimer

This calculator offers estimates for informational purposes only and does not constitute financial or legal advice. Results depend on the accuracy of the inputs and assumptions. For exact loan terms, quotes, and legal obligations, consult your lender or financial advisor.
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