Mortgage Calculator

Your monthly mortgage payment is more than principal and interest. Lenders bundle in property taxes, homeowners insurance, and, if your down payment is under 20%, private mortgage insurance (PMI). This guide breaks down each piece, shows the formula behind the principal-and-interest figure, and then works through the variations people actually search for: interest-only, adjustable rate, biweekly payments, overpayments and prepayments, prequalification limits, FHA and VA loans, and what changes for a UK borrower.

Every dollar figure below is arithmetic from one worked example, a $400,000 home with $80,000 down, so a $320,000 loan at 6.5% over 30 years, with $3,600 a year in property tax and $1,200 a year in insurance. The 6.5% is an input, not a quote. Rates move weekly and vary by borrower, so put your own rate in the calculator before trusting any number here as your number.

What makes up your monthly mortgage payment (PITI)

Lenders think in PITI:

• Principal: the portion that pays down what you borrowed.
• Interest: the lender's charge on the remaining balance.
• Taxes: annual property tax, collected monthly into an escrow account.
• Insurance: homeowners insurance, plus PMI if your equity is below 20%.

Only the first two are the mortgage. The last two are bills the lender collects on your behalf and pays out for you, which is why they show up on your mortgage statement despite having nothing to do with the loan.

How the principal and interest payment is calculated

The core figure uses the standard amortization formula:

M = P · r · (1 + r)ⁿ ⁄ ((1 + r)ⁿ − 1)

where P is the loan amount, r is the monthly interest rate (annual rate ÷ 12), and n is the number of payments (years × 12).

Worked through on the example:

• Loan amount: $400,000 − $80,000 = $320,000
• Monthly rate: 6.5% ÷ 12 = 0.541667%, or 0.00541667
• Number of payments: 30 × 12 = 360
• Monthly principal and interest: $2,022.62
• Total of 360 payments: about $728,142
• Total interest: $728,142 − $320,000 = $408,142

That last line is the one worth sitting with. Over the full term you pay back more than the loan amount again in interest alone.

Mortgage calculator with taxes and insurance: why the quoted payment is not the real one

A lender quote, a listing site, and most rate tables show you principal and interest only. That is the smaller number. The payment that actually leaves your account each month includes escrow.

Component	Annual	Monthly
Principal and interest	$24,271.44	$2,022.62
Property tax	$3,600.00	$300.00
Homeowners insurance	$1,200.00	$100.00
Total PITI	$29,071.44	$2,422.62

The escrow portion adds $400 a month, about 19.8% on top of the principal-and-interest figure. Budget from the $2,022.62 and you are $4,800 a year short.

Two things make escrow harder to predict than the loan itself. Property tax is set by your local authority as a rate against an assessed value, and both the rate and the assessment change, so the figure you enter today is a starting point rather than a fixed cost. Homeowners insurance is repriced at each renewal. When your servicer runs its annual escrow analysis and finds the account short, your monthly payment rises even though your interest rate never moved. Your principal and interest on a fixed-rate loan is genuinely fixed. Your PITI is not.

Find your real numbers rather than guessing at them. Property tax for a specific address is public record, look it up on the county assessor or treasurer site. Insurance comes from a quote on the actual property, not a rule of thumb, because roof age, construction type and flood or wind exposure move it enormously.

How much does PMI add, and when does it drop off?

If your down payment is under 20% of the purchase price on a conventional loan, the lender adds private mortgage insurance. It protects the lender, not you, and it is quoted as an annual percentage of the loan balance, then charged in twelfths.

Monthly PMI = Loan amount × annual PMI rate ÷ 12

Enter that annual percentage in the PMI field of the calculator. Note that the worked example puts 20% down, so it carries no PMI at all. To see the effect, take the same $400,000 home with $40,000 down instead, a $360,000 loan. At a quoted annual rate of 0.5% that is $1,800 a year, or $150.00 a month, charged on top of principal, interest, tax and insurance. PMI rates vary a great deal with credit score, down payment and loan type, from a few tenths of a percent up towards the 1.5% mark, so use your own quote rather than a typical figure. If your down payment is 20% or more, leave the field at zero.

PMI is temporary, which is what separates it from an FHA premium. Under the US Homeowners Protection Act, on most conventional loans on a primary residence you can request cancellation once the balance reaches 80% of the original value, and the servicer must terminate it automatically at 78% provided you are current. On that $360,000 loan, 80% of the original $400,000 value is a balance of $320,000, the point at which you can ask, and 78% is $312,000, the point at which the servicer must terminate without being asked. Paying extra gets you there sooner, and an appraisal showing the home is worth more can get you there sooner still. Diary the date. Servicers are reliable about the automatic 78% termination and much less reliable about reminding you that you could have asked at 80%.

How the principal and interest split changes over time

Interest is charged on whatever you still owe, so early payments are almost entirely interest.

The first payment on the example loan splits like this:

• Interest: $320,000 × 0.00541667 = $1,733.33
• Principal: $2,022.62 − $1,733.33 = $289.28

So of the first $2,022.62, only 14.3% reduces the debt. After five years of payments the balance has fallen from $320,000 to about $299,555, meaning five years and roughly $121,000 of payments have bought you about $20,445 of principal. The ratio flips slowly and then quickly, and by the final years almost the whole payment is principal.

This is the mechanism behind everything in the rest of this guide. Anything that reduces the balance early has an outsized effect, because it removes interest from every month that follows.

How does an interest only mortgage calculator work?

On an interest-only mortgage you pay only the lender's charge on the balance for an agreed period. Nothing comes off the debt.

Interest-only payment = Loan amount × annual rate ÷ 12

On the example: $320,000 × 6.5% ÷ 12 = $1,733.33 a month. That is $289.28 less than the fully amortizing $2,022.62, and it is exactly the interest component of the first regular payment calculated above, which is the clearest way to see what interest-only actually is. It is the normal payment with the principal removed.

Two consequences follow immediately. Over a ten-year interest-only period you would pay $208,000 in interest and still owe the full $320,000. And the saving is small relative to the cost, because early payments were mostly interest anyway. You give up all principal reduction to save 14% of the payment.

The calculator on this page is a fully amortizing model, so to see an interest-only figure, do the multiplication above, or read the interest line of the first month's split.

What happens to the payment when the interest only period ends?

This is the part that catches people, and it is the reason to model it before signing rather than after.

When the interest-only period ends, the loan converts to fully amortizing over the remaining term. The balance has not moved, but the time available to repay it has shrunk. Take a 30-year loan with a 10-year interest-only period:

Phase	Balance	Years left to repay	Monthly payment
Years 1 to 10, interest only	$320,000	n/a	$1,733.33
Years 11 to 30, amortizing	$320,000	20	$2,385.83

The payment jumps by $652.50, a 37.6% increase, on a single scheduled date, with no change in the interest rate at all. If the rate has also risen by then, the jump is larger.

The lifetime cost tells the same story. Ten years of interest-only at $1,733.33 is $208,000, and the following 20-year amortization at 6.5% costs $252,600 in interest, for $460,600 total. The plain 30-year loan costs $408,142. The interest-only structure costs about $52,458 more and leaves you a decade behind on equity.

Interest-only genuinely suits some borrowers: irregular or commission-heavy income where a low required payment plus voluntary lump sums beats a high fixed obligation, or a property you intend to sell inside the interest-only window. It does not suit anyone whose plan for the reset is that something will turn up. Model the reset payment at a rate higher than today's before you commit.

How does an ARM mortgage calculator work?

An adjustable-rate mortgage is fixed for an initial period, then resets on a schedule for the rest of the term. The names describe the schedule: a 5/1 ARM is fixed for five years then adjusts annually, a 7/1 is fixed for seven, a 10/1 for ten, and a 5/6 ARM is fixed for five years then adjusts every six months.

After the fixed period, the rate is rebuilt from two parts at every adjustment:

New rate = Index + Margin, then clipped by the caps

The index is a published benchmark rate, and US ARMs written today generally use a SOFR-based index. It moves with the market and neither you nor the lender controls it. The margin is a fixed number of percentage points your lender adds, it is written into your note and does not change for the life of the loan. Comparing ARMs means comparing margins and caps, because the index will be the same for everyone.

Caps limit how far the rate can move. They are usually written as three numbers, for example 2/2/5:

• The first is the initial cap, the most the rate can move at the first adjustment.
• The second is the periodic cap, the most it can move at each later adjustment.
• The third is the lifetime cap, the ceiling above the start rate for the whole loan.

The lifetime cap is the number that matters, because it defines your worst case, and your worst case is the only honest basis for deciding whether you can afford an ARM. There is often a floor as well, below which the rate will not fall no matter what the index does.

To model an ARM in the calculator, run it in two passes. Enter the start rate and the full term to get the initial payment. Then, for the reset, take the balance at the end of the fixed period and treat it as a new loan over the remaining years. On a $320,000 loan starting at 5.5% for five years:

Stage	Balance	Rate	Term remaining	Payment
Years 1 to 5	$320,000	5.5%	30	$1,816.92
First reset	$295,874	7.5%	25	$2,186.48

The payment rises $369.56, or 20.3%. Both rates there are illustrative inputs chosen to show the mechanism, not forecasts, and no one can tell you what the index will be on your reset date. Run your own lifetime cap through it: if start rate plus lifetime cap gives a payment you could not make, the ARM is not affordable regardless of how attractive the teaser period looks. When a reset is approaching, the Refinance Calculator will tell you whether swapping to a fixed rate covers its own closing costs.

Is a biweekly mortgage payment worth it?

A biweekly plan splits your monthly payment in half and takes it every fortnight. The saving comes from a calendar quirk, not from any change in the rate.

There are 52 weeks in a year, so 26 fortnights, so 26 half-payments. But there are only 12 months:

• Half payment: $2,022.62 ÷ 2 = $1,011.31
• Paid 26 times a year: $1,011.31 × 26 = $26,294.06
• Twelve monthly payments: $2,022.62 × 12 = $24,271.44
• Difference: $2,022.62, exactly one extra monthly payment

So 26 half-payments is 13 monthly payments. You pay 8.33% more per year, and because that extra lands on the principal it compounds through the rest of the schedule. Modelled at 6.5% with interest accruing fortnightly, the example loan clears in about 628 fortnights, roughly 24 years and 2 months, and total interest falls from $408,142 to about $314,146, a saving near $93,997.

Two cautions. First, the benefit is the thirteenth payment, not the fortnightly rhythm, so paying an extra $168.55 a month (one twelfth of the payment) gets you to essentially the same place, 290 months and about $315,069 of interest. Second, some servicers hold each half-payment and apply nothing until both halves arrive, which removes the fortnightly accrual benefit but keeps the thirteenth payment. Others charge a setup or per-transfer fee to run the plan for you, which is worth nothing when you can achieve the same result with a standing order. Ask your servicer how they apply partial payments before paying anyone to arrange this.

How much do mortgage overpayments save?

An overpayment, or prepayment, is any amount above the required payment that goes straight to principal. Because it removes balance early, it removes interest from every remaining month.

Here is the example loan with different extra amounts added to the $2,022.62 monthly payment:

Extra per month	Payoff time	Total interest	Interest saved
$0	30 years	$408,142	-
$100	26 years 2 months	$346,444	$61,698
$200	23 years 5 months	$302,714	$105,429
$300	21 years 2 months	$269,696	$138,446
$500	18 years 0 months	$222,590	$185,552
$1,000	13 years 2 months	$156,743	$251,400

The returns are startling at the small end. The first $100 a month buys $61,698 of interest saving and cuts almost four years off the term. That is $100 doing more work than most people expect, because at 6.5% every dollar of balance removed saves compounding interest for up to 30 years.

Timing matters as much as amount. A single $10,000 lump sum paid at the start of the example loan cuts the term to 27 years 5 months and saves about $54,000 in interest. The same $10,000 paid in year 15 saves about $15,600, and paid in year 25 it saves about $3,600, because by then there is almost no remaining term for it to work across. Early money is worth many times late money.

Three practical points. Tell the servicer in writing that extra funds are to be applied to principal, otherwise many will treat it as a prepaid future instalment, which does nothing for your interest. Check your note for a prepayment penalty, uncommon on US residential mortgages now but not extinct, and standard on UK fixed deals as an early repayment charge. And compare the guaranteed return first: overpaying a 6.5% mortgage is a risk-free 6.5% return, which is excellent against savings but usually poor against credit card debt at 20% or more. Clear the expensive debt first, and use the Loan Payoff Calculator to compare the two, it takes a balance, a rate, a payment and an extra monthly amount, which is exactly the overpayment question.

Mortgage prepayment calculator: should you cut the term or cut the payment?

When you make a large prepayment you face a choice that most people do not realise they are making, and the default is usually right.

Keep paying the same amount. The balance drops, the payment stays where it is, and the loan simply ends earlier. This is what happens automatically if you do nothing.

Recast the loan. You ask the servicer to recalculate the payment against the new, lower balance over the original remaining term. The payment falls, the end date does not move. Servicers typically charge a modest fee and require a minimum principal reduction. This is not a refinance, the rate and term are untouched, so there is no credit check and no closing costs.

The difference is large. Take the example loan five years in, with a balance of $299,555, and apply a $20,000 lump sum:

After the $20,000 lump sum	Monthly payment	Time left	Interest from here
Keep the payment at $2,022.62	$2,022.62	21 years 4 months	$237,499
Recast over the remaining 25 years	$1,887.58	25 years	$286,718

Keeping the payment ends the loan three years and eight months earlier and costs about $49,218 less in interest. Recasting buys $135.04 a month of breathing room instead.

So: cut the term when the goal is lifetime cost and the payment is comfortable. Cut the payment when cash flow is genuinely tight, when income has dropped, or when a lower fixed obligation lets you sleep. Recasting is also the quiet answer for anyone who has bought a new home before selling the old one, the sale proceeds go in as a lump sum and the payment resets to something sustainable. Neither choice is wrong, but choosing by accident is.

What does a mortgage prequalification calculator check?

Prequalification is an estimate of what a lender would be willing to advance you, based on figures you state rather than documents you provide. It is not preapproval, which involves verified income, a credit pull and an underwriting decision, and it is not a commitment to lend.

The estimate turns on two debt-to-income ratios, usually cited as the 28/36 rule. It is an old guideline rather than a law, and programs and lenders vary around it, but it is the shape of the test:

• Front-end ratio: total housing cost (full PITI, not just principal and interest) divided by gross monthly income, guideline 28%.
• Back-end ratio: all monthly debt payments, housing plus car loans, student loans, minimum card payments and child support, divided by gross monthly income, guideline 36%.

Worked through on a $8,000 gross monthly income:

• 28% front-end ceiling: $8,000 × 0.28 = $2,240 of total PITI
• Subtract the escrow you actually expect, $300 tax plus $100 insurance: $1,840 for principal and interest
• At 6.5% over 30 years, $1,840 a month supports a loan of about $291,000
• With 20% down, that is a purchase price near $364,000
• 36% back-end ceiling: $8,000 × 0.36 = $2,880 for all debt, so if you already pay $600 on a car and $150 on cards, housing has to come down to $2,130, which is the binding constraint rather than the 28%

That last line is the useful one. For most buyers the back-end ratio, not the front-end, is what limits the loan, which means clearing a car loan can raise your borrowing power more than saving another few thousand for the deposit. Note also that the ratio tests use gross income while you pay the mortgage out of net, so a payment at the 28% ceiling is a considerably larger share of what actually reaches your account. Lenders also look at credit score, reserves, employment stability and the appraisal, none of which any ratio captures.

To use the calculator this way, work backwards: try a home price, read the PITI, and compare it against your own 28% and 36% ceilings.

How is an FHA loan calculator different?

An FHA loan is insured by the Federal Housing Administration and aimed at borrowers with smaller down payments or weaker credit than conventional underwriting allows. The amortization arithmetic is identical. What differs is the mortgage insurance, and it differs in ways that matter for the lifetime cost.

Conventional loans carry PMI, which is cancellable. FHA loans carry a mortgage insurance premium (MIP) in two parts:

• An upfront premium (UFMIP), charged at closing as a percentage of the loan and usually financed into the loan rather than paid in cash. That means you start out owing more than the purchase price minus the deposit, so enter the increased figure as your loan amount when modelling.
• An annual premium, charged monthly as a percentage of the balance, which sits alongside taxes and insurance in your monthly payment exactly as PMI would.

The critical structural difference: FHA annual MIP does not necessarily fall away with equity. Depending on the loan-to-value at origination and the term, it can run for a set number of years or for the entire life of the loan, whereas conventional PMI must terminate at 78% of original value. That is why many FHA borrowers refinance into a conventional loan once they hold 20% equity, they are refinancing to escape the premium as much as to chase a rate. The Refinance Calculator will tell you whether that move pays for its closing costs.

FHA also sets county-level loan limits, requires an appraisal against its own property standards, and prices both premium components by down payment and term. Every one of those percentages is revised from time to time, so take the current figures from HUD or your lender on the day, put the resulting monthly premium into the PMI field of the calculator, and add the upfront premium to your loan amount.

How is a VA mortgage calculator different?

A VA loan is guaranteed by the Department of Veterans Affairs and available to eligible service members, veterans and some surviving spouses. Two features change the arithmetic substantially.

No down payment is required for eligible borrowers within the guaranty. Set the down payment field to zero and the loan equals the purchase price, which raises both the payment and the total interest against an otherwise identical conventional loan. The trade is straightforward, you buy sooner with no cash deposit and pay more over the term.

There is no monthly mortgage insurance. None, at any loan-to-value. Leave the PMI field at zero. This is the largest single advantage of a VA loan and it is why a VA payment can undercut a conventional one at the same rate despite the larger balance.

In place of monthly insurance, most borrowers pay a one-time funding fee. It is a percentage of the loan, it is typically financed into the loan rather than paid at closing, and it is set by a small grid: the size of your down payment, and whether this is your first use of the entitlement or a subsequent one. It is waived for borrowers receiving VA compensation for a service-connected disability and for certain surviving spouses, which is worth checking carefully because the exemption is valuable and easy to overlook. The percentages in that grid change, so take the current ones from the VA and add the resulting amount to your loan figure in the calculator.

You still pay property tax and homeowners insurance, and they are still escrowed, so PITI is calculated exactly as above.

Mortgage calculator UK: what changes for British borrowers

The arithmetic is the same everywhere, the same amortization formula produces the same payment. The calculator here is labelled in dollars, so a UK reader can read every figure as pounds without changing any of the maths. What genuinely differs is the vocabulary and the structure around the loan.

Repayment versus interest-only. A UK repayment mortgage is what the formula above models, capital and interest, ending at zero. A UK interest-only mortgage works exactly as described earlier, and lenders now require a credible repayment vehicle for the capital before they will offer one. The interest-only payment is still balance × rate ÷ 12.

Fixed periods are short, the term is long. Where a US borrower fixes for 30 years, a UK borrower typically takes a two, three, five or ten year fixed deal on a 25-year-or-longer term, then remortgages onto a new deal. If you do nothing at the end of the deal you roll onto the lender's standard variable rate, which is normally considerably more expensive, so the remortgage is the routine event that a US borrower only encounters at an ARM reset. Model it the same way, take the balance at the end of the fixed period and treat it as a new loan over the remaining years.

LTV bands drive the rate. Pricing steps at thresholds, commonly 95%, 90%, 85%, 80%, 75% and 60%. Crossing a band downwards, by saving slightly more or by the property revaluing, can move the rate more than shopping between lenders does.

Product fees and early repayment charges. UK deals often carry an arrangement fee that can be paid upfront or added to the loan, and a fee-free deal at a slightly higher rate frequently beats a low-rate deal with a large fee on a small mortgage. Fixed deals normally carry an early repayment charge during the fixed period, and usually permit overpayments up to a stated annual percentage of the balance without penalty, 10% is the common allowance but it is a contract term, so read yours.

Things that sit outside the mortgage. There is no UK equivalent of a US tax-and-insurance escrow. Council tax is paid direct to the council, buildings insurance direct to the insurer, and neither is collected by the lender, so the UK monthly mortgage payment is genuinely just principal and interest. Stamp duty land tax is a one-off purchase cost, not a monthly one, and its bands and thresholds change with government policy, so take the current rates from GOV.UK and treat it as part of your cash-to-complete alongside the deposit, legal fees and survey. There is also no PMI as such, the lender prices the risk of a small deposit into the rate through the LTV bands instead.

To use this calculator as a UK mortgage calculator, then: read dollars as pounds, put the annual tax and insurance fields at zero, leave PMI at zero, enter your deal rate and the full term, and read the principal-and-interest figure.

How to lower your payment or total interest

• A bigger deposit or down payment shrinks the principal and can remove PMI entirely at 20%.
• A shorter term raises the monthly payment and slashes lifetime interest. On the example, 15 years costs $764.93 more a month and saves $226,384 in interest against the 30-year.
• A lower rate. Rate is the single largest driver of lifetime cost, and quotes differ between lenders on the same day for the same borrower, so collect several.
• Extra principal payments. Even $100 a month saves $61,698 here, and early money is worth far more than late money.
• Drop PMI as soon as you can. Request cancellation at 80% rather than waiting for automatic termination at 78%.
• Check the escrow, not just the loan. Shopping homeowners insurance at renewal and appealing a property tax assessment both lower PITI without touching the mortgage.
• Refinance when the arithmetic works. Divide the closing costs by the monthly saving to get the break-even month, and only proceed if you will hold the loan past it. The Refinance Calculator does that comparison.

Common mortgage calculator mistakes

Budgeting from the principal-and-interest figure. It ignores escrow. On the example that is $400 a month and $4,800 a year, and on a high-tax county it can be far more.

Assuming a fixed-rate payment never changes. The interest portion is fixed. The escrow portion is re-analysed annually and moves with tax assessments and insurance renewals.

Reading the interest-only payment as the cost of the loan. It is the cost of the loan for now. The reset on the example adds $652.50 a month on a date you already know, and the structure costs about $52,458 more over 30 years.

Judging an ARM by its start rate. The number that decides affordability is the start rate plus the lifetime cap, because that is the payment you have agreed you might have to make.

Paying a service to set up biweekly payments. The benefit is the thirteenth annual payment. You can produce it yourself by adding one twelfth of the payment each month, for free.

Sending extra money without instructions. Unlabelled extra funds are often applied as a prepaid instalment rather than to principal, which saves no interest at all.

Recasting when the goal was to finish early. Recasting lowers the payment and keeps the end date. On the example that choice costs about $49,218 in extra interest against simply keeping the payment where it was.

Treating FHA mortgage insurance like conventional PMI. PMI must terminate at 78% of original value. FHA annual MIP can run for the life of the loan, which is a different lifetime cost and often a reason to refinance later.

The bottom line

Your real payment is principal + interest + taxes + insurance (+ PMI). Budget for all of it. Then pick your structure with the reset in mind rather than the opening payment: an interest-only or adjustable loan is a bet on your position at the reset date, and the honest way to take that bet is to check you could make the post-reset payment today. Once the loan is running, the two levers that matter most are the rate, which you set by shopping before you sign, and extra principal paid early, which you control every month afterwards. The rates in this guide are illustrative inputs, always confirm current rates and current program figures with lenders.

Related calculators

• Refinance Calculator: whether a new rate and term beat your current loan after closing costs
• Loan Payoff Calculator: model an extra monthly payment against any balance and rate
• Compound Interest Calculator: compare overpaying the mortgage against investing the same money
• Savings Goal Calculator: work out the monthly amount that reaches your deposit by a target date
• Take-Home Pay Calculator: the net figure your PITI actually has to come out of
• Auto Loan Calculator: the car payment that eats into your back-end debt-to-income ratio