Mortgage Calculator

How to use the mortgage calculator

Enter the home price and down payment to set the loan amount. Then enter the annual interest rate you want to model and choose a 15-year, 20-year, or 30-year term. If you know monthly property taxes, homeowners insurance, or HOA dues, add them. If you leave those fields blank, they are treated as $0 — not as a typical U.S. cost.

The starting values on the form are examples you can change. They are not a recommendation and are not presented as current market averages.

What your estimated monthly mortgage payment includes

The large result is principal and interest plus any optional monthly amounts you entered. A lender’s total payment can also include escrow and mortgage insurance. The Consumer Financial Protection Bureau describes that difference: principal and interest are the loan repayment, while the amount you send each month may also cover taxes and insurance held in escrow.

Principal and interest

Principal is the money borrowed. Interest is the cost of borrowing it at the rate you entered. This calculator uses a fixed rate, so the scheduled principal-and-interest payment stays the same after rounding. What changes each month is the split: more interest at first, more principal later.

Property taxes

Property taxes are set by local governments and can change from year to year. This tool does not estimate them from a ZIP code or a national average. If you include taxes, enter a monthly dollar amount. If you only know the annual bill, divide that bill by 12.

Homeowners insurance

Lenders typically require homeowners insurance. Premiums depend on the home, coverage, and insurer. Enter a monthly amount if you want insurance in the total. The calculator will not invent a premium.

HOA fees

Homeowner association dues are a separate housing cost. They are not part of the loan amortization. Include them only when they apply to the property you are modeling.

How down payment affects the loan

Loan amount equals home price minus down payment. A larger down payment means a smaller loan, a lower principal-and-interest payment, and less total interest if the rate and term stay the same. If the down payment equals the home price, the estimated loan amount is $0. A down payment larger than the home price is rejected instead of being turned into a made-up loan.

How interest rate affects payment and total interest

You supply the annual rate. FinanceAvatar does not display a “current mortgage rate.” A higher rate raises both the monthly principal-and-interest payment and the interest paid over the life of the loan. A 0% rate is treated as a simple split of the loan amount across the monthly payments.

15-year vs. 30-year mortgage mechanics

A shorter term has fewer payments, so more of each payment goes to principal and the loan is paid off sooner. The monthly principal-and-interest amount is usually higher. A longer term lowers that monthly amount and typically increases total interest. The on-page comparison holds your loan amount and entered rate constant so you can see the term effect by itself. In the market, 15-year and 30-year rates are often not the same.

What the calculator does not include

• Private mortgage insurance (PMI) or FHA mortgage insurance
• Closing costs, points, or prepaid interest
• Adjustable-rate, interest-only, or balloon loans
• Extra principal payments or biweekly calendars
• Credit, debt-to-income, or lender eligibility checks
• Looked-up local tax or insurance rates

The CFPB explains that mortgage insurance protects the lender, is often required with a smaller down payment, and is a cost this estimate leaves out unless you add it on your own.

How mortgage payments are calculated

For a fixed-rate amortizing loan, the monthly principal-and-interest payment is:

M = P[r(1+r)^n] / [(1+r)^n − 1]

• M is the monthly principal-and-interest payment
• P is the principal (home price minus down payment)
• r is the monthly interest rate (annual rate divided by 12)
• n is the number of monthly payments (years × 12)

If the annual rate is 0%, there is no interest to compound, so M = P / n. Each payment then reduces the balance by the same amount, aside from a last-payment rounding adjustment that brings the balance to zero. The same method is described on the site-wide Calculator Methodology page.

Assumptions and limitations

• The loan is a fixed-rate, fully amortizing installment loan.
• Payments are monthly and begin immediately in the model.
• The rate you enter does not change over the term.
• Optional taxes, insurance, and HOA amounts stay constant in the estimate.
• Currency amounts are rounded to the nearest cent. The final amortization payment is adjusted so the remaining balance does not finish below zero.

These assumptions keep the math transparent. They are not a picture of every mortgage product, and they are not advice about which loan you should choose.