Estimating the cost of a home loan
Buying a home is usually the largest loan a person ever takes on, and a small change in rate or term moves the numbers by tens of thousands of dollars. This calculator turns the four inputs that drive a mortgage — home price, down payment, interest rate, and term — into the figure that actually hits your budget each month, plus the total interest you will hand the lender by the time the loan is paid off. Enter a down payment as a dollar amount or a percentage; the two fields stay in sync.
Worked example: a $350,000 home loan at 6.5% over 30 years
Suppose you borrow $350,000 at a 6.5% annual rate on a 30-year term. The monthly rate is 6.5% ÷ 12 = 0.5417%, spread across 360 payments. Running those through the amortization formula gives a fixed payment of about $2,212/month. Over the full 30 years you repay roughly $796,406 in total — which means about $446,406 of that is interest, more than the original amount borrowed.
What this estimate leaves out
The monthly figure here is principal and interest only. Your real housing bill is usually larger: property taxes and homeowner's insurance are commonly collected into an escrow account and added to the payment, private mortgage insurance (PMI) applies when you put down less than 20%, and condos or planned communities add HOA dues on top. The result also assumes a single fixed rate for the entire term — an adjustable-rate mortgage, points paid at closing, or extra principal payments will all change the outcome. Use this as a planning estimate, then ask a lender for a Loan Estimate before committing.
Mortgage questions, answered
How is a mortgage monthly payment calculated?
The monthly payment uses the standard amortization formula: M = P × [r(1+r)^n] / [(1+r)^n − 1], where P is the loan amount (home price minus down payment), r is the monthly interest rate (annual rate ÷ 12), and n is the total number of payments (years × 12). Each payment covers accrued interest first, with the remainder reducing the principal balance, until the loan reaches zero at the final payment.
How much down payment do I need for a mortgage?
The required down payment depends on your loan type. Conventional loans typically require 3–20%. FHA loans allow as little as 3.5% with a 580+ credit score. VA and USDA loans can require no down payment for eligible borrowers. Putting down less than 20% on a conventional loan usually triggers private mortgage insurance (PMI), which increases your effective monthly cost. A larger down payment reduces both your loan amount and total interest paid.
What is not included in a mortgage payment calculator?
This tool calculates your principal and interest (P&I) payment only. Your actual monthly housing expense will also include property taxes, homeowner's insurance, and — if your down payment is under 20% — PMI. Lenders often refer to the full payment as PITI (Principal, Interest, Taxes, Insurance). Ask your lender for a full Loan Estimate to see every cost component.
What is amortization?
Amortization is the process of repaying a loan through fixed, scheduled payments. Each payment covers the interest that has accrued since the last payment; the remainder reduces the outstanding principal. In the early years of a 30-year mortgage, most of each payment is interest — you may pay off surprisingly little principal in years 1–5. As the balance falls, the interest portion shrinks and principal paydown accelerates.
Should I choose a 15-year or 30-year mortgage?
A 30-year mortgage offers a lower monthly payment but costs far more in total interest. A 15-year mortgage means a higher monthly payment but dramatically less interest and faster equity growth. On a $400,000 loan at 7%, the 30-year option costs roughly $558,036 in interest over the life of the loan; the 15-year option costs about $247,158 — a difference of over $310,000. Use the calculator above to compare terms for your specific numbers.