Mortgage Calculator

Understanding Your Mortgage

A mortgage calculator is an essential tool for prospective homebuyers to understand the financial implications of their home purchase. It helps you estimate monthly mortgage payments based on your home price, down payment, interest rate, and loan term.

Using our free mortgage calculator, you can see how different down payments and interest rates affect your monthly payments and the total cost of your home over the life of the loan. This allows you to make an informed decision about what you can afford.

Key Mortgage Components Explained

• Principal: The original loan amount (home price minus down payment).
• Interest: The cost of borrowing money, expressed as an annual percentage rate (APR).
• Down Payment: The initial upfront payment (typically 3-20% of home price).
• Loan Term: The length of time to repay the loan (commonly 15 or 30 years).
• Monthly Payment: The amount paid each month, including principal and interest.
• Total Cost: The total amount paid over the life of the mortgage loan.

Mortgage Tips for Home Buyers

• A larger down payment reduces your loan amount, monthly payments, and total interest.
• Even a 0.5% lower interest rate can save thousands over the life of your mortgage.
• Consider additional costs beyond the mortgage: property taxes, insurance, HOA fees, and maintenance.
• Shorter loan terms (15 years vs. 30 years) have higher monthly payments but significantly lower total interest.
• Getting pre-approved for a mortgage strengthens your position when making offers on homes.

Mortgage Calculation Formula

The standard formula for calculating the monthly payment (M) for a fixed-rate mortgage is:

• P = Principal loan amount
• i = Monthly interest rate
• n = Number of months required to repay the loan