How This Mortgage Calculator Works
Enter the home price and your down payment, and the calculator first determines your loan amount (home price minus down payment). It then applies 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, and n is the total number of monthly payments, to calculate a fixed monthly principal-and-interest payment for the life of the loan.
Understanding Down Payments and Interest
A larger down payment reduces your loan amount, which lowers both your monthly payment and the total interest you'll pay over the loan term. Even small differences in interest rate can add up to tens of thousands of dollars over a 30-year mortgage, which is why it's worth comparing rates and down payment scenarios before committing. Note that this calculator estimates principal and interest only — it does not include property taxes, homeowners insurance, PMI, or HOA fees, which are often bundled into a real mortgage payment.
FAQ
Does this include taxes and insurance?
No, this calculator computes principal and interest only. Actual monthly mortgage payments (often called PITI) typically also include property taxes, homeowners insurance, and sometimes PMI.
How does a bigger down payment help?
A larger down payment reduces the loan amount you're borrowing, which directly lowers both your monthly payment and the total interest paid — and may help you avoid private mortgage insurance (PMI) if you reach 20% down.
What loan term should I choose?
Common terms are 15 and 30 years. A 30-year term has lower monthly payments but more total interest; a 15-year term has higher payments but builds equity faster and costs less in interest overall.