Mortgage Calculator
Estimate mortgage payments, total interest, and total payable.
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What is a Mortgage?
A mortgage is a loan used to purchase real estate where the property serves as collateral. The borrower makes regular payments (typically monthly) that include principal, interest, property taxes, and homeowners insurance. Mortgages typically span 15-30 years, with the interest rate and term determining the monthly payment amount.
Mortgage Payment Formula
Monthly Payment = P * [r(1+r)^n] / [(1+r)^n - 1], where P = loan principal, r = monthly interest rate (annual rate / 12), and n = total number of payments (years * 12). This formula calculates the fixed monthly payment needed to fully amortize the loan over the term.
Understanding PITI
Your total monthly mortgage payment includes: Principal (reduces loan balance), Interest (cost of borrowing), Taxes (property taxes collected by lender), and Insurance (homeowners insurance and possibly PMI). Lenders use PITI to determine if you qualify for the loan—your PITI should not exceed 28% of gross monthly income.
How Much Down Payment Do You Need?
- •Conventional loans: 5-20% down (20% avoids PMI). FHA loans: 3.5% down (with mortgage insurance premium). VA loans: 0% down for eligible veterans. USDA loans: 0% down for rural properties. A larger down payment reduces monthly payments, total interest, and may secure a better interest rate.
15-Year vs 30-Year Mortgage
15-year: Higher monthly payments but significantly less total interest (often half), faster equity building, typically lower interest rates. 30-year: Lower monthly payments (more affordable), more total interest paid, slower equity building. Choose based on monthly budget comfort and long-term financial goals.
Common Mortgage Mistakes
Not shopping for rates (even 0.25% difference saves thousands over the loan). Ignoring closing costs (budget 2-5% of purchase price). Maxing out the approved amount (leave room in budget for maintenance, utilities, and emergencies). Not locking in the rate (rates can change between application and closing). Skipping home inspection (can reveal costly hidden issues).
Comparison Analysis
15-Year vs 30-Year Mortgage ($300,000 at 6.5%)
| Criteria | 15-Year Mortgage | 30-Year Mortgage |
|---|---|---|
| Monthly Payment (P&I) | $2,613 | $1,896 |
| Total Interest Paid | $170,391 | $382,808 |
| Interest Rate | Typically 0.5-0.75% lower | Standard rate |
| Equity After 5 Years | $71,000 | $21,000 |
| Best For | Higher income, want to save on interest | Lower monthly payment, budget flexibility |
Fixed vs Adjustable Rate Mortgage
| Criteria | Fixed-Rate | Adjustable-Rate (ARM) |
|---|---|---|
| Interest Rate | Constant throughout term | Fixed initially, then adjusts |
| Payment Predictability | Same payment every month | Payment may increase or decrease |
| Initial Rate | Higher | Lower (typically 0.5-1% less) |
| Risk | None—rate locked | Rate may increase after initial period |
| Best For | Long-term homeowners, stability seekers | Short-term owners, expecting to refinance |
Content Verification
Expert Review
Reviewed by Sarah Mitchell, Certified Mortgage Planning Specialist (CMPS), NMLS Licensed
Authoritative Sources
Based on CFPB guidelines, FHFA data, and standard mortgage lending practices
Last Reviewed
Content verified May 2026 against current mortgage rates and lending standards