Free mortgage calculator

How the mortgage calculator works

A mortgage payment looks complicated because lenders bundle four things into one bill. The calculator unpacks them. You type a price, a rate, and a term. It returns the fixed principal-and-interest payment using the standard amortization formula, then layers property taxes, homeowners insurance, PMI, and HOA dues on top to show your full monthly cost.

• M = monthly principal & interest payment
• P = loan amount (home price minus down payment)
• r = monthly interest rate (annual rate divided by 12)
• n = total number of payments (years times 12)

What the result actually means

Two numbers matter. The big one is the monthly payment, because that is what hits your bank account every month. The hidden one is total interest, because over thirty years it can be larger than the loan itself. A half-point lower rate cuts both. So does a shorter term. The calculator shows both side by side so you can see the trade-off without doing the math twice.

What's in your monthly mortgage payment (PITI)

The lender's "monthly payment" is four moving parts in one envelope. Mortgage pros call them PITI: principal, interest, taxes, insurance. The calculator separates them so you can see exactly where every dollar goes.

Principal — pays down the loan

The dollars going toward the loan balance. Tiny at the start, large at the end. On a $320,000 loan at 6.5%, your first month's principal is roughly $290. By year 18, principal overtakes interest. That milestone shows up live in the Insights panel as "Principal > interest from Year 18."

Interest — pays the lender's rent

Calculated each month against the remaining balance. Same $320,000 loan, first-month interest is about $1,733, roughly 86% of the payment. By the last year, interest is barely $50 a month. Amortization, doing what it does.

Taxes — your county's share

Property taxes assessed on the home's value. Most lenders collect them monthly in escrow rather than letting you pay the county directly. US rates range from about 0.3% annually in low-tax states to 2.2% in the highest, with the national median near 1.0%.

Insurance — protects the lender and you

Homeowners insurance is required by every mortgage. Premiums run $1,200 to $2,400 per year for a mid-priced US home, more in disaster-prone areas. PMI is added here automatically when your down payment is below 20% of the home price.

A worked example using the mortgage calculator

Step 1 — Enter the home price and down payment

She enters $400,000 as the home price and an $80,000 down payment. The loan amount becomes $320,000. Twenty percent down also means no PMI on either offer, so the comparison stays clean.

Step 2 — Run the bank's offer

At 6.5% over 30 years the calculator shows a principal-and-interest payment of $2,023/mo and total interest of about $408,000 over the life of the loan.

Step 3 — Switch to the credit union

She drops the rate to 6.1% and the term to 25 years. The new payment is $2,076/mo, only $53 more each month. But the total interest falls to about $303,000.

Step 4 — Read the long-term gap

The monthly numbers look almost identical. The lifetime numbers do not. The credit union loan costs $105,000 less in interest. The bank loan is locked in for an extra 60 monthly payments.

How much house can you afford?

The monthly payment is half the answer. The other half is how that payment lines up against your income. Two rules do most of the heavy lifting on US mortgages: the 28% rule and the 36% rule.

The 28% rule (front-end ratio)

Housing costs (PITI plus HOA) should stay under 28% of gross monthly income. Above that, you are stretched. The Insights panel runs this calculation live, every time you change an input. For a $2,528/mo payment, the minimum income to stay inside 28% is roughly $108,300/yr gross.

The 36% rule (back-end ratio, also called DTI)

Total monthly debt — mortgage plus car loans plus student loans plus minimum credit card payments — should stay under 36% of gross income. Lenders accept higher ratios up to 43% for borrowers with strong credit, but every dollar above 36% squeezes the rest of your budget.

Working backward to find your price ceiling

Reverse the math. Take your gross monthly income, multiply by 0.28, subtract a rough $300–$700 for monthly taxes and insurance, and the remainder is the principal-and-interest payment your income can support. Plug that into the calculator with your rate and term to find the loan amount.

Assumes 20% down, 6.5% rate, 30-year fixed, 1.2% of home price for taxes and insurance, 28% rule.

The Free affordability calculator runs this in reverse for you. Enter your income, get the price ceiling.

How much can I borrow? (vs. how much can I afford?)

Two different questions, two different answers. Lenders ask "how much can I lend you?" using their underwriting math. You should ask "how much can I afford?" using your real budget. The two answers can be tens of thousands of dollars apart, and the gap matters.

The lender's view — debt-to-income ratio

Lenders use back-end DTI: total monthly debts (mortgage plus car plus student loans plus minimum credit card payments) divided by gross monthly income. Conventional underwriting accepts up to 43% DTI for most borrowers, sometimes 50% with strong compensating factors (high credit, large reserves, stable income).

At 43% DTI a borrower earning $120,000 gross can technically commit to $4,300/mo in total debt service. If they have $500 in car payments and $300 in student loans, that leaves $3,500/mo for the mortgage — enough to qualify for a loan around $475,000 at current rates.

Your view — the 28% comfort rule

The 28% rule says housing alone should stay under 28% of gross income. Same $120,000 earner: $2,800/mo for housing. At current rates, that loan is closer to $370,000.

The gap: $105,000 of loan capacity the lender will give you and you probably should not take.

Which number to use

The lender's number is your ceiling, not your target. The 28% number is your target. Aim for 28% when shopping. Use the 43% DTI ceiling only if you have unusually steady income, low future expenses, and no other goals competing for the same cash flow.

When to use this mortgage calculator

Open this calculator any time a mortgage decision turns on what the real monthly cost is.

• Before you make an offer — to set a price ceiling that fits the monthly cost you can actually carry.
• While comparing lenders — to read the full-life cost of two offers, not just the monthly payment they advertise.
• When considering extra payments — to see how an extra $200 each month shortens the loan and cuts total interest.
• Before refinancing — to test whether a lower rate at a higher payment, or a shorter term at the same payment, is the better trade.

30-year vs. 15-year mortgage: which term is right for you?

The term is the single biggest lever on your total mortgage cost. Shorter terms cost less in interest, more in monthly cash. There is no universally right answer. There is a clear trade-off you can read off the calculator.

Assumes $320,000 loan amount, US conventional 2026 rate environment, rates rounded.

When 30-year wins

You want the lowest possible monthly payment so the rest of your budget breathes. You expect income to grow, so refinancing or recasting later is realistic. You would rather invest the difference than pour it into home equity. Most US homebuyers, most of the time.

When 15-year wins

You can carry the higher payment without straining other goals. You want the loan gone in your forties or fifties, free and clear. You value the interest savings over investment optionality. Borrowers within ten years of retirement often go this route.

The compromise: 20 or 25 years

Splits the difference. Most lenders quote 20-year terms even though they advertise only 15 and 30. Ask. The 20-year on a $320,000 loan saves roughly $178,000 in interest versus the 30-year for a $270 higher monthly payment.

Fixed-rate vs. adjustable-rate (ARM) mortgages

Fixed-rate loans lock your interest rate for the entire term. Adjustable-rate mortgages (ARMs) lock it for a few years, then reset every year or every six months based on a benchmark index plus a margin. The calculator on this page is a fixed-rate calculator.

When fixed wins

Most US homebuyers, most of the time. The rate is yours for the full term. Your payment is predictable for thirty years. No reset risk.

When an ARM can win

You plan to sell or refinance within the fixed period. ARMs offer a lower starting rate, typically 0.25 to 0.75 percentage points below the fixed-rate equivalent. If you exit before reset, you pocket the difference. If you stay, you absorb whatever the market does at year five or seven.

ARM jargon, decoded

• 5/1 ARM — 5 years fixed, then resets every 1 year.
• 7/6 ARM — 7 years fixed, then resets every 6 months.
• 10/1 ARM — 10 years fixed, then resets every 1 year.
• Benchmark + margin — at each reset, the new rate is a benchmark index (usually SOFR) plus a fixed margin (often 2.0 to 2.75 percentage points).
• Caps — first-reset cap (often 2 points), periodic cap (often 2 points), lifetime cap (often 5 points over starting rate).

Repayment vs. interest-only mortgages

Most US mortgages are repayment loans — every monthly payment chips away at the principal balance, and by the final payment you own the home outright. Interest-only mortgages do not work that way. The monthly payment covers only the interest charge; the principal balance never goes down during the interest-only period. Two very different products with very different risk profiles.

A note on terminology: "repayment mortgage" is the standard UK term for what Americans usually just call a "mortgage" (amortizing). When you search for a "repayment calculator" in UK or Irish results, that is what this calculator computes. UK and Irish lenders differentiate explicitly between repayment and interest-only because both are sold as standard products there.

How a standard repayment mortgage works

Every monthly payment splits between interest (charged on the remaining balance) and principal (reduces the balance). Early on, most of the payment is interest. Late in the term, most is principal. By the final month, the balance hits zero. The amortization schedule in the full report above shows the exact split for every month.

How an interest-only mortgage works

During the interest-only period (typically 5 to 10 years), the monthly payment is just the balance times the monthly rate. On a $320,000 loan at 6.5%, that is $1,733/mo — meaningfully lower than the $2,023 full repayment number. The catch: the principal balance stays at $320,000 the entire interest-only window. When the IO period ends, the loan converts to full repayment over the remaining term and the monthly payment jumps sharply — usually 30% to 40% higher.

When interest-only makes sense (rare)

• Lumpy income across the year — sales reps with year-end bonuses, contractors with project-based payouts. They make ad-hoc principal payments when the cash arrives.
• UK buy-to-let landlords — most UK rental property loans are interest-only by default. The strategy: pay only interest while letting the property; sell or refinance at the end of the term to clear the principal.
• Short hold periods with appreciation conviction — buy a home you plan to sell within 5 years and believe will appreciate enough to cover the principal at exit.

When it does not

Almost every other case. If you cannot afford the full repayment payment, you cannot afford the home. The interest-only payment is a teaser that ends. When it ends, the loan re-amortizes over a shorter remaining term at whatever rate prevails then. Borrowers who treated interest-only as their permanent number often lose the home at the reset.

How much should you put down on a house?

20% gets all the headlines. The data on actual US buyers tells a different story — the median first-time-buyer down payment is closer to 6%, and the median repeat buyer is closer to 17%. The right number for you balances three things: PMI avoidance, cash reserves, and opportunity cost.

20% — the PMI escape velocity

At 20% down on a conventional loan, you skip private mortgage insurance entirely. That can be $100 to $300 a month saved, depending on the loan amount and your credit. For most buyers in normal markets, 20% is the right target if you can hit it without draining your emergency fund.

5%–19% — conventional with PMI

You can put as little as 3% down on a conventional loan through Fannie Mae's HomeReady or Freddie Mac's Home Possible programs. PMI is added monthly and drops off automatically when you reach 22% equity (78% LTV), or you can request removal at 20%. The trade-off: lower upfront cash, higher monthly payment for a few years.

0%–3.5% — government-backed loans

FHA loans accept 3.5% down with credit scores as low as 580. VA loans, for active military, veterans, and qualifying spouses, accept 0% down. USDA loans, for rural properties under income caps, accept 0% down. Each carries its own mortgage-insurance equivalent — see loan types below.

The opportunity cost test

A 20% down payment on a $400,000 home is $80,000 cash. Compare what that money would have earned invested in a balanced portfolio (historically 6%–8% annually) against the PMI it saves and the interest it skips by lowering the loan amount. The math tips toward "put 20% down" for most buyers, but if you have a high-conviction investment plan or a refundable PMI loan structure, the case for less down opens up.

Types of mortgages: conventional, FHA, VA, USDA, and jumbo

The five major US mortgage types differ on down payment, credit requirements, mortgage insurance, and loan limits. The calculator on this page works for all of them — you just need to know which one you are shopping.

Source: Fannie Mae, FHA, VA, USDA program guidelines, 2026 conforming loan limit $806,500 (most counties). Limits and rules vary by lender and state.

Which to ask about

• Most US buyers default to conventional. Lowest long-run cost if you can hit 20% down.
• Active military and veterans almost always check VA first. No down payment, no monthly mortgage insurance, lower rates.
• First-time buyers with limited cash check FHA. Lowest credit bar, smallest down payment among non-government-employment loans.
• Buyers in rural areas with moderate income check USDA. 0% down, capped by area income limits.
• Buyers in expensive markets often need jumbo above the conforming limit ($806,500 in most counties in 2026, higher in high-cost areas).

Closing costs and other upfront costs

The down payment is the cash everyone talks about. Closing costs are the cash everyone forgets. They run 2% to 5% of the loan amount, paid the day you sign. On a $320,000 loan that is $6,400 to $16,000 you need on hand on top of the down payment.

What is in closing costs

• Lender fees — origination, underwriting, application charges, typically 0.5%–1% of the loan amount.
• Third-party fees — appraisal ($400–$700), home inspection ($300–$600), title insurance ($1,000–$3,000), recording fees ($100–$300), survey if required.
• Prepaid escrow — first months of property tax and homeowners insurance, plus prepaid interest from closing date to first payment. Often $1,500–$5,000.
• Discount points, if you choose to buy them — each point costs 1% of the loan and typically lowers your rate by about 0.25 percentage points.

Total cash to close — the day-1 number

Down payment plus closing costs plus the cash reserves the lender wants to see in your account (typically two to six months of PITI). On a $400,000 home at 20% down, plan on roughly $80,000 + $10,000 + $5,000 = $95,000 liquid.

Are points worth it?

Each point lowers your rate by about a quarter point. The math is a breakeven test: divide the point cost by the monthly savings to find how many months until you recoup it. Most points break even at 48–72 months. If you will keep the loan past the breakeven, points pay off. If you might sell or refinance sooner, skip them.

APR vs. interest rate: what's the actual difference?

Lenders quote two numbers on every Loan Estimate: the interest rate and the APR. The interest rate looks lower. The APR is the more honest one. Federal law requires both because they tell different stories — and which number to use depends on what you are trying to do.

What the interest rate is

The interest rate is the percentage charged on the loan balance, expressed annually. It is what this calculator uses to compute your monthly principal and interest payment. On a $320,000 loan at 6.5%, the rate alone produces a $2,023/mo P&I — the payment you live with for the life of the loan.

What APR adds

APR (Annual Percentage Rate) is the interest rate plus most lender fees — origination, underwriting, discount points, certain third-party charges — converted into an equivalent annualized percentage. APR is always higher than the rate when fees are present. It expresses the true cost of borrowing as a single number you can compare across lenders.

Example. Same $320,000 loan at 6.5% from two lenders. Lender A charges $4,000 in fees; Lender B charges $1,000. Both quote 6.5%. Lender A's APR is roughly 6.65%; Lender B's is roughly 6.54%. The actual cost difference over the life of the loan is around $7,000.

Why the calculator uses rate, not APR

Monthly payments are mathematically computed from the rate. APR is a comparison tool, not a payment-calculation tool. Use the interest rate in this calculator to find your monthly payment. Use APR side by side when comparing two or three offers from different lenders.

How to read your Loan Estimate

Federal regulation (TRID) requires every US lender to provide a standardized Loan Estimate within three business days of application. Page 3 of the Loan Estimate shows both numbers, and a "comparisons" section explicitly invites you to compare APRs across competing offers. That is the section to use when you have multiple offers in hand.

Mortgage amortization explained

Amortization is the engine inside every fixed-rate mortgage. It is what makes the monthly payment stay constant while the split between principal and interest shifts. On a new 30-year loan, the first payment is roughly 80% interest. By the last year it is almost all principal. That is why two loans with similar monthly payments can have wildly different lifetime costs.

Principal vs interest — which matters when

Both matter, but at different moments. Early on, interest dominates. Extra payments in the first decade clear the most future interest because they cut the balance the bank charges against. Late in the loan, your payment is mostly principal already and overpaying barely moves the total. If you plan to sell or move within five years, you will have built less equity than the payment count suggests.

Common mistakes that skew the result

• Forgetting taxes and insurance — the P&I figure is not your real monthly cost. Add escrow. For most US homeowners, taxes plus insurance add $300 to $700 per month.
• Ignoring PMI — under 20% down, PMI adds real money every month until you hit 20% equity, usually three to seven years in.
• Comparing only monthly payments — two loans can match within $30 a month and differ by $100,000 over their lives. Always compare total interest.
• Using the listing price as the home price — the contract price is what your loan is built on, not the asking price.

Typical 30-year fixed rate ranges

Source: illustrative conventional 30-year fixed ranges, 2025–2026. Confirm current quotes with at least three lenders before locking.

How extra payments shrink your mortgage

The amortization curve gets very rewarding when you front-load principal. Every dollar of extra principal early in the loan saves multiple dollars of future interest. Late in the loan, the same dollar barely moves the needle. Timing matters as much as amount.

Why early matters more than late

Year-one interest on a $320,000 loan at 6.5% is roughly $20,650. Year-25 interest is roughly $5,400. The extra $200 you throw at principal in year 1 spares you future interest charges on that $200 across all 29 remaining years. The same $200 in year 25 only spares interest charges for 5 years. Same dollar, very different result.

What different amounts shave off

Based on $320,000 loan, 6.5%, 30-year fixed, extra principal starting month 1. Real results depend on when you start and consistency.

The biweekly hack

Pay half your monthly payment every two weeks instead of one full payment monthly. You end up making 26 half-payments per year, which equals 13 full payments. The extra payment goes straight to principal. Same effect as one extra monthly payment per year — about 4 years off a 30-year loan.

The base calculator above is the no-extra-payments scenario. For the same math focused on the answer, use the Free mortgage payoff calculator — same amortization engine with an extra-principal input.

The true cost of owning the home, not just the mortgage

The mortgage calculator answers a specific question. It does not answer "how much will this house cost me to own?" Five hidden costs make the difference between the calculator's monthly payment and your real housing bill. Most online calculators leave these off. They are real.

1. Maintenance reserve (1%–3% of home value per year)

The roof needs replacing every 25 to 30 years. The HVAC every 15 to 20. The water heater every 10. Painters, plumbers, electricians on rotation. The financial-advisor rule of thumb sets aside 1% of the home's value annually for maintenance. Older homes need closer to 3%.

2. Utilities (often higher than your prior rental)

Bigger square footage equals higher heating, cooling, water, and electric bills. Average US single-family utility bill runs $300–$500 per month, often double what a one-bedroom apartment cost. Geothermal, solar, and high-efficiency HVAC change this — most homes do not have them.

3. The opportunity cost of your down payment

Your $80,000 down payment is no longer earning returns elsewhere. At a 7% balanced-portfolio average, that is about $5,600 per year in foregone gains, roughly $470 per month. Some buyers count this as a real cost. Some do not. Both views are defensible. Just be honest about which view you are taking.

4. Capex — big-ticket replacements

A roof replacement runs $10,000–$30,000. HVAC: $5,000–$12,000. Kitchen remodel: $20,000–$70,000. Plan for one major capex event every 5 to 7 years on top of routine maintenance. Build a sinking fund for them or you will be borrowing again when they hit.

5. Transaction costs when you sell

Realtor commissions are typically 5%–6% of sale price. Add transfer taxes, closing costs again, possible capital gains tax above the $250k single / $500k married exemptions. Total exit cost: 7%–9% of sale price. If you sell within 5 years, you may not have built enough equity to clear these costs after subtracting your remaining loan balance.

Recasting vs. refinancing vs. extra payments: which lowers your payment fastest?

You have a mortgage. You want to pay less or pay it off sooner. Three tools, three different uses, and most borrowers do not know which to reach for.

Extra principal — lowers total cost, not monthly payment

You pay more than required each month or year. Your monthly payment does not change. The loan ends earlier and you pay less total interest. Best when: you can afford your current payment and want to clear the loan faster.

Recasting — lowers monthly payment after a lump sum

You drop a chunk of cash on the principal (usually $10,000 minimum), then ask the lender to recast — recalculate your monthly payment over the remaining term at the new lower balance. Same rate, same end date, lower monthly payment. Typical recast fee: $250–$500. Most conventional lenders allow recasting once or twice per loan. FHA, VA, and USDA usually do not. Best when: you get a windfall (inheritance, bonus, sale of another asset) and want immediate monthly relief.

Refinancing — replaces the loan entirely

New loan, new rate, new term, new closing costs. Breakeven on the closing costs is the test: how many months of monthly savings does it take to repay the closing costs? Under 24 months and you should probably refinance. Over 60 months and you should probably skip unless you plan to stay 10+ more years. The Free refinance calculator does this math. Best when: rates have dropped 0.75 percentage points or more below your current rate.

A simple decision flow

• Got a windfall, want lower monthly? Recast.
• Rates dropped 1 point or more below your current rate? Refinance.
• Just want to pay less interest over time? Extra principal monthly.
• All of the above? Recast the windfall, refi if rates allow, then keep adding extra principal monthly.

Mortgage calculator definitions

How accurate is this online mortgage calculator?

Calculators that work alongside the mortgage

These pair naturally with this one for decisions that sit nearby.

Frequently asked questions about the free mortgage calculator

About this mortgage calculator

This mortgage calculator runs entirely in your browser. Every number you type stays on your device. Nothing is sent to a server, logged, or shared. Math is rounded to the nearest cent, the amortization schedule rebuilds instantly on every change, and PMI activates automatically when your down payment falls under 20% of the home price.

Calculators Cloud offers 400+ free tools with no sign-up. The whole Finance calculators shelf includes Affordability, Refinance, Payoff, and Loan Comparison alongside this one. Or browse the full calculator directory.