Calculate your monthly mortgage payment, total interest, and full cost of your home loan
Your monthly mortgage payment is determined using an amortization formula that factors in the loan principal, interest rate, and loan term. The principal and interest (P&I) portion of your payment stays constant on a fixed-rate mortgage, but the split between principal and interest shifts over time. Early payments are mostly interest, while later payments go primarily toward reducing the principal balance.
Your total monthly payment typically includes more than just P&I. Property taxes, homeowners insurance, and potentially Private Mortgage Insurance (PMI) are often escrowed into the payment. PMI is usually required when your down payment is less than 20% of the home price, adding 0.5% to 1% of the loan amount annually until you reach sufficient equity.
Choosing between a 15-year and 30-year term significantly impacts both your monthly payment and total interest paid. A shorter term means higher monthly payments but dramatically less interest over the life of the loan. Fixed-rate mortgages offer predictable payments, while adjustable-rate mortgages (ARMs) may start lower but can fluctuate with market conditions. Always compare multiple scenarios to find the best fit for your budget and financial goals.