Mortgage Payment Calculator
How much will my mortgage payment be?
Accurate planning is a key part of developing a monthly budget, and knowing your mortgage payment plays an important role. Since there are several financial factors that determine your mortgage payment, we’ve developed this free mortgage payment and amortization calculator to help you more easily estimate the monthly amount you’ll be paying.
How to calculate your monthly mortgage payment
First, input the total purchase price of your new home, followed by the amount of your down payment – the money you’re paying in advance that will not be included in the loan amount.
Next, enter your estimated annual property tax in dollars. Your real estate agent should be able to provide you with this figure, or you can look up your local tax rate and use that percentage to reach a dollar amount based on the property’s assessed value. (Note that this is different from the purchase price and is determined by your local assessor’s office.)
Enter your annual home insurance cost – ask your real estate agent for an appropriate estimate for your home’s location and value – and, if applicable, homeowners association monthly dues. These costs will also be rolled into your monthly mortgage payment.
Finally, you’ll enter two figures related to your mortgage: the term of the loan in years and the mortgage interest rate you’ll be paying. (If you have an adjustable-rate mortgage, this percentage will change over the course of your loan, which means your monthly mortgage payment will also change.)
How to use the amortization calculator
Once you’ve calculated your monthly mortgage payment, tab over to view the results of the amortization calculator. This calculator helps you visualize the long-term cost of your mortgage and plan your finances accordingly. The results will show your loan amount, total interest paid, total cost of loan and mortgage payoff date. You have the option to see how adding extra payments will impact your amortization.
What is amortization?
Amortization is paying off debt over time in equal installments. As the term of your mortgage loan progresses, a larger share of your payment goes toward paying down the principal until the loan is paid in full at the end of your term.
Amortization schedule breakdown
The table provides your amortization schedule. Review this to understand how your payments are applied over time. Early in the loan, more of your payment goes towards interest. Over time, more goes towards reducing the principal balance.
How mortgages work
The basics of a mortgage are like other types of loans: A lender agrees to loan you an amount, and you agree to pay it back over time with interest. Other factors set mortgages apart, though: You don’t pay your car insurance through your monthly auto loan payment, for example. And while other loan terms may be measured in months or years, mortgages are often measured in decades.
What is included in a mortgage payment?
When you make your monthly mortgage payment, here’s where the money goes:
- Principal balance – This is the original amount of your loan. The longer you pay on your mortgage, the more of your payment goes toward this each month, because you’re paying a bit less interest as it decreases.
- Interest – This is the amount the lender is charging you for the loan. At the beginning, most of your mortgage payment addresses this debt.
- Property tax – Your annual property tax amount will be spread out over a year’s worth of payments and put into an escrow account held by the lender. When taxes are due each year, the lender uses this account to pay them.
- Home insurance – Like property taxes, your annual home insurance premium will be spread out over the year, put into escrow, and paid by the lender when the bill is due.
- PMI and HOA – If you have private mortgage insurance or homeowners association (HOA) monthly fees, these may also be included in your monthly mortgage payments.
Deciding on how much you can afford
When you’re using this calculator, adjust some of the inputs to see how it changes your monthly payments. This will help you determine how much home you can afford.
If you’re trying to keep your payments below a certain monthly amount, you can see how things like location (property tax), down payment, and the loan amount will affect your future monthly budgets.
How to lower your monthly mortgage loan payment
As the calculator demonstrates, things like a larger down payment or a smaller loan amount can help lower your monthly mortgage payments. Explore taking steps to improve your financial wellness, which may help earn you a better interest rate. You can also research neighborhoods with lower tax rates or shop around for a lower home insurance premium.
Additional mortgage calculators
Buying or refinancing a home can be confusing – we want to make beginning the journey as simple as possible. We’ve developed easy-to-use tools that will help you compare your options, calculate your payment, see how much mortgage you can afford, understand your debt-to-income ratio, and discover answers to many of your homebuying questions.
Use our free, interactive calculators to start getting answers and take the next financial steps toward your goals:
