Use this free mortgage calculator to estimate your monthly mortgage payment, total loan cost, interest paid, PMI, property taxes, and full amortization schedule.
Loan term
The amortization schedule shows every payment split into principal and interest. The extreme front-loading of interest in year 1 is why extra payments made early in a loan save dramatically more than the same payments made in year 20.
Every fixed-rate mortgage uses the standard amortization formula to calculate a payment that is identical every month but internally split between interest and principal in a ratio that shifts over time:
M = P × [r(1+r)^n] / [(1+r)^n − 1]
- P — Loan principal (home price minus down payment)
- r — Monthly interest rate (annual rate ÷ 12 ÷ 100)
- n — Total number of payments (years × 12)
On a $350,000 loan at 7% for 30 years: r = 7/12/100 = 0.005833, n = 360. The formula yields M = $2,329/month. That payment never changes — but what it covers does.
In month 1, interest = $350,000 × 0.5833% = $2,042. Of your $2,329 payment, only $287 reduces principal. By month 180 (year 15), the balance has fallen to ~$250,000, so interest = ~$1,458 and principal = ~$871. By month 359 (second-to-last payment), interest is less than $14. This shift — called amortization — means that in the first 5 years of a 30-year mortgage at 7%, you pay roughly 82% of each payment in interest and only 18% in principal. The amortization schedule below makes this visible row by row.
Because interest is front-loaded, the timing of financial decisions matters enormously. Refinancing in year 2 restarts the amortization clock — meaning you begin paying a high interest share again on a fresh loan, even at a lower rate. Run the numbers carefully: the break-even point where rate savings exceed the interest-reset cost is often longer than borrowers expect. Similarly, extra principal payments made in year 1–5 eliminate interest on a very high balance, producing outsized long-term savings compared to the same payments in year 15+. Use the extra payment calculator to model your exact scenario.
This calculator shows your P&I (Principal & Interest) — but lenders underwrite you against the full PITI. Understanding each component prevents the most common first-time buyer mistake: confusing the calculator result with the actual monthly bill.
Principal is the portion of each payment that reduces your outstanding loan balance and builds equity. In year 1 of a 30-year mortgage, principal accounts for roughly 15–20% of each payment. By year 25, it accounts for 70%+. The amortization schedule shows this shift in exact dollar terms for your loan. Every dollar of principal paid is equity returned to you — unlike interest, which is gone permanently.
Interest is calculated monthly on the remaining balance: balance × (APR ÷ 12). Because the balance is highest at the start of the loan, so is the interest charge. This is not a bank conspiracy — it is the mathematical result of charging a percentage rate on an outstanding balance that declines over time. The formula locks in a fixed payment; the split between interest and principal is a consequence of the balance, not a choice.
Property taxes are assessed annually by your county and collected monthly into an escrow account. After a home purchase, the assessed value is often reset to the sale price, triggering a tax reassessment that can significantly raise the prior owner's tax bill. In New Jersey, the median effective property tax rate is 2.2% — on a $400,000 home, that is $8,800/year or $733/month added to your PITI. In low-tax states like Hawaii or Alabama, the same home might generate $1,200/year or $100/month. Location alone can change your qualifying PITI by $600/month on an identical loan.
Homeowners insurance covers structural damage and liability. Annual premiums average $1,400–$2,500 nationally but can triple in high-risk areas (coastal Florida, Oklahoma tornado corridor). Lenders require coverage as a condition of the loan. PMI (Private Mortgage Insurance) is a second insurance layer required when your LTV exceeds 80%. It protects only the lender but is paid by you. At 1% of loan balance annually on a $320,000 loan, PMI = $267/month — adding to your PITI with zero direct benefit to you. Eliminating it is one of the highest-return financial moves available to homeowners.
PMI removal is one of the highest-leverage financial actions available to homeowners who bought with less than 20% down. The path does not require refinancing — it requires understanding LTV and knowing the rules.
- Automatic cancellation at 78% LTV: Your servicer is legally required to cancel PMI when your amortization schedule — based on the original purchase price — brings your balance to 78% LTV. No action required, but verify they do it.
- Borrower-requested cancellation at 80% LTV: You can submit a written request for early PMI cancellation once your balance reaches 80% of the original purchase price. Requirements: 12 months of on-time payments, evidence that the home value has not declined, and sometimes a certified appraisal.
If your home has appreciated significantly, you may reach 80% LTV ahead of the amortization schedule — without making extra payments. Example: you bought a $350,000 home with 10% down (loan = $315,000, LTV = 90%). Two years later the home is appraised at $420,000. New LTV = $310,000 ÷ $420,000 = 73.8% — well below 80%. You can request PMI cancellation immediately, subject to the lender's requirements (typically 24 months of payments and an appraisal).
Making extra principal payments directly accelerates the amortization schedule, moving the 80% LTV date earlier. On a $300,000 loan at 7% with 10% down (loan = $270,000), the standard amortization schedule reaches 80% of original purchase price ($240,000) in approximately year 8. Adding $200/month in extra principal payments can cut this to year 5–6, saving 2–3 years of PMI at ~$225/month = $5,400–$8,100 in eliminated PMI costs alone — before counting the interest savings from the lower balance.
The term decision is the most financially consequential choice in mortgage selection. Below is a side-by-side breakdown on a $350,000 loan at 7.0%:
| Factor | 15-Year Fixed | 30-Year Fixed |
|---|---|---|
| Monthly payment (P&I) | $3,145 | $2,329 |
| Monthly cost difference | +$816/mo | Base |
| Total interest paid | $216,100 | $488,440 |
| Interest savings vs 30-yr | $272,340 saved | — |
| Total repaid over term | $566,100 | $838,440 |
| Equity at year 5 | ~$128,000 | ~$52,000 |
| Typical rate (15-yr lower) | ~0.5–0.75% below 30-yr | Base rate |
| PMI elimination speed | Reaches 80% LTV faster | Slower equity build |
| Monthly cashflow flexibility | Lower (higher payment) | Higher (+$816/mo free) |
How to decide: The 15-year mortgage saves $272,340 in interest at the cost of $816/month in additional required payment. That $816/month locked into a higher mortgage payment is equivalent to a guaranteed 7% after-tax return on that capital. If your income can absorb the higher payment without stress and your emergency fund is intact, the 15-year is almost always the superior wealth-building choice. If cash flow is tight, the 30-year provides flexibility — but that flexibility has a $272,000 price tag.
A mortgage calculator helps home buyers estimate monthly mortgage payments before applying for a home loan. It provides a detailed breakdown of principal, interest, taxes, insurance, and PMI costs so borrowers can understand the true monthly cost of owning a home.
Using a mortgage payment calculator also helps compare different loan terms, interest rates, and down payment amounts. By adjusting these values, borrowers can see how small changes affect monthly payments and total interest paid over the life of the loan.
Whether you are buying your first home, refinancing an existing mortgage, or comparing loan offers, a mortgage calculator makes financial planning easier and more accurate.
See how different interest rates and down payments affect monthly payments.