Mortgage calculator
Most mortgage calculators give you principal and interest and stop there, which is why the figure never matches the real bill. This one adds property tax and insurance, so the number you see is closer to what actually leaves your account each month.
Built and checked by Mubashir, who works in accounting and finance. Formula and sources shown below. Not financial advice.
The property and loan
Total monthly payment
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Down payment
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Amount borrowed
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Total interest
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True cost of the home
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Show the working
The amortisation formula, with your figures substituted in:
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How to use this calculator
- Home price — the agreed purchase price, before closing costs.
- Down payment — switch between a percentage and a fixed amount with the dropdown. The percentage figure is shown in the results either way, because lenders price on it.
- Interest rate — the nominal annual rate quoted by the lender.
- Loan term — how long you have to repay. Fifteen and thirty years are the common choices, and the difference between them is larger than most people assume.
- Property tax and insurance — annual figures, divided by twelve and added to the payment. Leave them blank if you only want principal and interest.
Why your payment is bigger than the loan calculator said
Principal and interest are only part of a mortgage payment. Depending on where you are, the monthly bill may also carry property tax, homeowner insurance, mortgage insurance if your down payment was small, and in some places association fees.
Tax and insurance are frequently collected by the lender into an escrow account and paid on your behalf, which is why they appear on the mortgage statement rather than arriving as separate bills. On a typical mid-priced home they can add a fifth or more to the payment. A calculator that omits them produces a number that is arithmetically correct and practically useless for budgeting.
The down payment threshold
Twenty percent is not an arbitrary convention. In many lending markets it is the point below which the lender requires mortgage insurance — an additional monthly premium that protects the lender, not you, and that you pay for the privilege of borrowing more.
That makes the marginal cost of the last few percent unusually high. Going from 15% down to 20% down reduces your loan slightly, but it also removes an insurance premium entirely, so the effective return on those extra funds is far better than the interest rate alone suggests. If you are close to the threshold, it is usually worth reaching it.
Fifteen years against thirty
The shorter term has a higher payment and a much lower total cost. On a 240,000 loan at 6.5%, thirty years costs roughly 306,000 in interest; fifteen years costs about 136,000. Less than half, for a payment that is nowhere near double.
Shorter terms also usually carry a lower rate, since the lender is exposed for less time. The trade-off is flexibility: a thirty-year mortgage with voluntary extra payments gives you most of the savings while keeping the option to pay the smaller amount in a bad month. Whether that flexibility is worth the rate difference depends on how stable your income is.
What this calculator does not model
Closing costs, which typically run several percent of the price and are due at purchase. Mortgage insurance premiums, which vary by lender and loan-to-value ratio. Variable or adjustable rates, where the payment changes after an initial fixed period. Points paid upfront to buy down the rate. And any tax deductibility of mortgage interest, which exists in some jurisdictions and not others.
Not financial advice. Figures here are estimates from a standard formula. Your lender's quote will differ, and only the lender's own disclosure is binding. Speak to a qualified mortgage adviser before committing.
Frequently asked questions
How much mortgage can I afford?
A common guideline is that total housing costs stay under about 28% of gross monthly income, and all debt payments under about 36%. These are conventions rather than rules, and they take no account of your other obligations or how secure your income is.
What is escrow?
An account the lender maintains on your behalf to collect property tax and insurance monthly and pay them when due. It is why those costs appear in your mortgage payment rather than as separate annual bills.
Should I choose 15 or 30 years?
Fifteen costs far less in total interest and usually carries a lower rate. Thirty gives a lower required payment and more flexibility. A middle path is a thirty-year loan with voluntary extra payments, which captures most of the savings while keeping the smaller payment as an option.
Why do I need 20% down?
You often do not, but below that threshold most lenders require mortgage insurance, which adds a monthly premium that protects the lender rather than you. That makes the last few percent before 20% unusually valuable.
Does the calculator include closing costs?
No. Closing costs are paid at purchase rather than monthly, and vary widely by location and lender. Budget separately for them; several percent of the purchase price is a reasonable starting assumption.
What is a good interest rate?
Entirely dependent on the current market, your credit profile, the loan term and your down payment. Compare quotes from several lenders on the same day, since rates move and a quote from last month tells you little.