How to Use This Mortgage Calculator
Enter your home price, down payment amount, expected interest rate, and loan term. Click "Calculate" to instantly see your estimated monthly payment, total amount paid over the life of the loan, and total interest cost.
Adjust the inputs to compare different scenarios. For example, see how a larger down payment or shorter loan term affects your monthly payment and total interest.
Monthly mortgage payments are calculated using the standard amortization formula:
M = P [ r(1+r)^n ] / [ (1+r)^n - 1 ]
Where:
M = Monthly payment
P = Loan principal (home price - down payment)
r = Monthly interest rate (annual rate / 12)
n = Total number of payments (years x 12)
This formula ensures each payment covers the interest due that month plus a portion of principal, with the split gradually shifting toward more principal over time.
Example Calculation
For a $350,000 home with $70,000 down (20%), a 6.5% interest rate, and a 30-year term:
- Loan amount: $280,000
- Monthly payment: $1,770.09
- Total paid over 30 years: $637,232
- Total interest: $357,232
That means you pay more in interest than the original loan amount over 30 years. This is why even small rate reductions matter enormously.
Tips for Getting a Better Mortgage Rate
- Improve your credit score before applying. Scores above 740 typically qualify for the best rates.
- Compare multiple lenders. Rates can vary by 0.5% or more between lenders for the same borrower profile.
- Consider paying points. Each discount point (1% of the loan) typically lowers your rate by 0.25%.
- Make a larger down payment. Putting down 20% or more eliminates PMI and may qualify you for better rates.
- Choose a shorter term. 15-year mortgages typically have rates 0.5-0.75% lower than 30-year loans.
Types of Mortgage Loans
The most common mortgage types include:
- Fixed-rate mortgage: Interest rate stays the same for the entire loan term. Most predictable option.
- Adjustable-rate mortgage (ARM): Rate is fixed for an initial period (typically 5-7 years), then adjusts annually. Lower initial rate, but carries risk.
- FHA loan: Government-backed loan requiring as little as 3.5% down. Good for first-time buyers with lower credit scores.
- VA loan: Available to veterans and active military. No down payment required and no PMI.
- Jumbo loan: For loan amounts exceeding conforming limits ($766,550 in most areas for 2024). Typically requires excellent credit.