Mortgage Calculator

This mortgage calculator computes your monthly payment and shows the complete amortization schedule, breaking down how much goes to principal versus interest over the life of the loan. It also demonstrates the powerful impact of making extra payments.

1. Enter the home price or loan amount. This is the total amount you need to borrow. If you have a down payment, subtract it from the home price to get the loan amount.
2. Input the annual interest rate. This is the rate your lender quotes. Even small differences in interest rates (like 6% vs 6.5%) significantly impact total costs over 30 years.
3. Select the loan term. Choose between 15-year and 30-year mortgages. Shorter terms mean higher monthly payments but dramatically lower total interest paid.
4. Add any extra monthly payment (optional). Even small additional payments like $100-200 per month can shave years off your mortgage and save tens of thousands in interest.
5. Review the payment breakdown. The calculator shows how much of each payment goes to principal versus interest. In early years, most of your payment is interest.
6. Examine the amortization schedule. This table shows every payment over the loan's life, revealing exactly when you build equity versus pay interest.

Pay close attention to the total interest paid over the loan's life. This number is often larger than the original loan amount for 30-year mortgages. The extra payment comparison shows how small additional payments can dramatically reduce both time to payoff and total interest.

How Amortization Works

Mortgage amortization is front-loaded with interest. Your monthly payment stays constant, but the allocation between principal and interest shifts over time. In the first years of a 30-year mortgage, 70-80% of your payment goes to interest, not equity. Only in later years does the principal portion exceed interest. This is why refinancing or moving homes frequently means you never escape the high-interest early years.

15-Year vs 30-Year Mortgages

A 15-year mortgage has higher monthly payments but saves massive amounts in interest. For a $300,000 loan at 6%, a 30-year mortgage costs about $347,000 in total interest, while a 15-year costs only $154,000—a savings of nearly $200,000. The 15-year payment is about 50% higher monthly, but you own the home in half the time and pay less than half the total interest. If you can afford the higher payment, a 15-year mortgage is one of the best wealth-building decisions.

The Impact of Extra Payments

Extra principal payments have an outsized effect because they eliminate future interest charges on that principal. A $200 extra payment in year one saves you from paying interest on that $200 for the next 29 years. Even modest extra payments like $100-200 monthly can cut years off a 30-year mortgage and save $50,000+ in interest. The key is consistency—set up automatic extra payments so you never miss them.

PMI and Down Payments

Private Mortgage Insurance (PMI) is required when your down payment is less than 20% of the home price. PMI typically costs 0.5-1% of the loan amount annually, adding hundreds to your monthly payment with zero benefit to you—it only protects the lender. A 20% down payment eliminates PMI and reduces your loan amount, lowering monthly payments and total interest. If you cannot afford 20% down, prioritize paying extra to reach 20% equity as quickly as possible to cancel PMI.

Fixed vs Adjustable Rates

Fixed-rate mortgages maintain the same interest rate for the entire loan term, providing payment certainty. Adjustable-rate mortgages (ARMs) start with lower rates that adjust periodically based on market conditions. ARMs can save money if you plan to sell or refinance before the adjustment period, but they carry significant risk if rates rise. During periods of low rates, fixed mortgages are generally safer. Only choose ARMs if you have a specific, time-bound plan and understand the maximum possible payment increases.