Mortgage Calculator
Estimate your monthly mortgage payment from home price, down payment, interest rate and term. Includes total interest paid and loan-to-value breakdown.
How your mortgage payment is calculated
The loan is what's left after your down payment: loan = home price − down payment.
That loan is then repaid in equal monthly instalments using the standard amortization formula:
Payment = P × r × (1 + r)ⁿ / ((1 + r)ⁿ − 1)
where P is the loan amount, r is the monthly interest rate
(annual rate ÷ 12 ÷ 100) and n is the number of monthly payments (years × 12).
At a 0% rate the payment is simply P ÷ n.
Worked example
A 300,000 home with a 20% down payment (60,000) leaves a loan of
240,000. At 6.5% over 25 years: r = 6.5 ÷ 12 ÷ 100 = 0.005417
and n = 300, giving a monthly payment of about 1,620. Over 300 payments you repay
≈ 486,000, of which ≈ 246,000 is interest — so the true cost of the home, including the down payment,
is roughly 546,000.
Why loan-to-value matters
LTV = loan ÷ home price. In the example above it is 240,000 ÷ 300,000 = 80% — the classic
threshold. At 80% or below, lenders generally offer their best rates and US borrowers avoid private
mortgage insurance; above it, expect PMI or a rate premium. If your LTV badge shows a warning, try a
slightly larger down payment and watch how much total interest it removes.
Levers that cut the total cost
- Bigger down payment — shrinks the loan, the payment, the interest and the LTV at once.
- Shorter term — a higher payment, but dramatically less total interest.
- Rate shopping — even 0.25% off the rate saves thousands over a 25-year loan; compare offers on total interest, not the monthly figure.
Frequently asked questions
How is a monthly mortgage payment calculated?
With the standard amortization formula: EMI = P × r × (1 + r)n / ((1 + r)n − 1), where P is the loan (home price minus down payment), r is the monthly rate (annual rate ÷ 12 ÷ 100) and n is the number of monthly payments. A 0% promotional rate is simply P ÷ n.
What is LTV and why does 80% matter?
Loan-to-value is the loan divided by the home price. At or below 80% LTV (i.e. a 20% down payment) most lenders offer better rates and, in the US, you avoid private mortgage insurance (PMI). Above 80% you typically pay PMI or a higher rate.
How much down payment do I need?
It varies: conventional loans often accept 5–20%, FHA loans 3.5%, and some first-time-buyer schemes less. But a bigger down payment shrinks the loan, the monthly payment, the total interest and the LTV — try different values above and watch all four move.
Does this include property tax and insurance?
No — this calculator shows principal and interest only. Lenders often quote PITI (principal, interest, taxes, insurance); add your local property tax and home insurance estimates on top of the monthly figure shown here.
Is a 25-year or 30-year term better?
A longer term lowers the monthly payment but you pay interest for longer, so total interest rises sharply. Compare the "Total interest" figure at both terms — many borrowers are surprised the 30-year option can cost 20–30% more in interest.