How the mortgage calculator works
Principal and interest come from the standard fixed-rate amortization formula that lenders use:
- P: loan amount (home price minus down payment)
- r: annual interest rate ÷ 12
- n: number of monthly payments (years × 12)
At a 0% rate the formula reduces to P ÷ n. Each month, interest is the balance × r and the rest of the payment reduces the balance, which is why early payments are mostly interest. On top of principal and interest we add:
- Property tax: home price × tax rate ÷ 12
- Insurance: annual premium ÷ 12
- PMI: loan amount × PMI rate ÷ 12, charged only while the balance is above 80% of the price
- HOA: monthly dues as entered
Extra payments go straight to principal, so the loan ends sooner. The schedule below the calculator simulates every month to find the exact payoff date.
Worked example
A $400,000 home with 20% down ($80,000) leaves a $320,000 loan. At 6.5% for 30 years, r = 0.065 ÷ 12 = 0.0054167 and n = 360:
Add 1.1% property tax ($366.67 a month) and $1,800 a year of insurance ($150 a month), and the full payment is about $2,539 a month. Over 30 years you would pay about $408,142 in interest. Adding $200 a month in extra principal pays the loan off about 6.6 years early (April 2050 instead of November 2056 for a December 2026 start) and saves about $105,400 of interest; set Extra monthly payment to 200 above to see the exact figures.
Frequently asked questions
What is included in a monthly mortgage payment?
Most lenders quote PITI: principal, interest, property taxes and homeowners insurance. If you put down less than 20% on a conventional loan you usually also pay private mortgage insurance (PMI), and condos or planned communities may add HOA dues. This calculator shows each piece separately.
How is the monthly mortgage payment calculated?
Principal and interest use the standard amortization formula M = P × r(1+r)^n / ((1+r)^n − 1), where P is the loan amount, r is the annual rate divided by 12 and n is the number of monthly payments. Taxes, insurance, PMI and HOA are then added on top.
When does PMI go away?
On conventional loans, lenders must cancel PMI automatically when your balance is scheduled to reach 78% of the original home value, and you can request removal at 80%. This calculator drops PMI once the balance falls to 80% of the purchase price.
How much do extra payments save?
Extra principal payments reduce the balance that interest is charged on, so they shorten the loan and cut total interest. Enter an amount in Extra monthly payment to see the new payoff date and the interest saved compared with no extra payments.
Should I choose a 15-year or 30-year mortgage?
A 15-year loan has a higher monthly payment but usually a lower rate and far less total interest. A 30-year loan keeps the payment lower and leaves room in your budget. Change the term to compare both side by side.
Is this the same payment my lender will quote?
It should match the principal and interest a lender quotes for the same loan amount, rate and term. Taxes, insurance and PMI vary by county, insurer and credit score, so treat those lines as estimates and replace them with real quotes when you have them.
Updated October 2026. Results are estimates for education, not financial or medical advice. All math runs in your browser; nothing you type is sent anywhere.