Mortgage Calculator
Calculate Your Monthly Payment, Total Interest & Full Amortization Schedule
🏠 Interactive Mortgage Calculator
💰 Loan Information
🏡 Property Taxes & Insurance
Required if down payment < 20%
📚 Understanding Mortgage Types
🏦 Fixed-Rate Mortgage
Best For: Long-term homeowners wanting stability
Pros: Payment never changes, predictable budgeting
Common Terms: 15-year, 30-year (most popular)
📈 Adjustable-Rate (ARM)
Best For: Short-term owners or rate bettors
Pros: Lower initial rate than fixed mortgages
Risk: Rate can increase after fixed period (3/1, 5/1, 7/1 ARM)
🏛️ FHA Loan
Best For: First-time buyers with limited savings
Pros: As low as 3.5% down payment required
Cost: Requires mortgage insurance (MIP) for life of loan
🎖️ VA Loan
Best For: Military veterans and active duty
Pros: 0% down payment, no PMI required
Funding Fee: One-time fee (1.4-3.6% of loan amount)
💵 Sample Monthly Payments by Loan Amount
⚠️ Assumptions: These payments are for 30-year fixed mortgages at 6.5% interest rate. Does NOT include property tax, insurance, HOA, or PMI.
Interest Rate Impact on $400K Loan
🔢 Mortgage Calculation Formulas
Essential Mathematical Formulas:
1. Monthly Mortgage Payment Formula:
M = P × [r(1+r)ⁿ] ÷ [(1+r)ⁿ - 1]
Where:
M = Monthly payment
P = Principal loan amount
r = Monthly interest rate (annual rate ÷ 12)
n = Number of payments (years × 12)
2. Total Interest Paid:
Total Interest = (M × n) - P
Example: ($2,528 × 360) - $400,000 = $510,176 total interest
3. Loan Amount Based on Down Payment:
Loan Amount = Home Price - Down Payment
Or: Loan Amount = Home Price × (1 - Down Payment %)
4. Monthly Interest Portion of Payment:
Interest Payment = Remaining Balance × (Annual Rate ÷ 12)
Principal Payment = Monthly Payment - Interest Payment
5. Debt-to-Income Ratio (DTI):
DTI = (Total Monthly Debt ÷ Gross Monthly Income) × 100%
Lenders typically require DTI ≤ 43% (preferably ≤ 36%)
💡 Essential Mortgage Facts
Critical Information for Homebuyers:
📌 20% Down Payment Eliminates PMI:
Private Mortgage Insurance (PMI) costs 0.5-1.5% of loan amount annually ($2,000-6,000/year on $400K loan). It's required when down payment is less than 20%. PMI protects lender, not you. Save 20% down to avoid this cost, or plan to refinance once you reach 20% equity. FHA loans require MIP for life of loan regardless of equity.
📌 Interest Rates Massively Impact Total Cost:
On $400K loan, difference between 5.5% and 7.5% interest is $526/month or $189,360 over 30 years. Even 0.5% difference costs $50,000+ over loan life. Shop multiple lenders—rates can vary 0.25-0.5% between lenders on same day. Credit score of 760+ vs 620 can mean 1-2% higher rate = $150,000 more paid.
📌 First Years are Mostly Interest:
With 30-year mortgage, 70-80% of early payments are interest, not principal. On $400K loan at 6.5%, your first payment: $2,528 total, $2,167 interest, only $361 principal. After 5 years, you've paid $151,680 but only reduced loan by $21,000. This is why 15-year mortgages build equity faster—more goes to principal from day one.
📌 15-Year vs 30-Year Mortgages:
15-year: Higher monthly payment but save massive interest. $400K at 6%: 15-year = $3,375/month, total interest $207,500. 30-year = $2,398/month, total interest $463,352. You save $255,852 with 15-year but payment is $977 higher. Choose based on cash flow—can you afford higher payment? 15-year typically has 0.25-0.75% lower interest rate too.
📌 Extra Principal Payments Save Thousands:
Paying one extra payment per year on $400K mortgage saves $118,000 in interest and pays off loan 6 years early. Adding $200/month extra saves $156,000 and shortens loan by 9 years. Extra payments go 100% to principal—huge impact. Even $50-100/month helps. Make sure to specify "apply to principal" when making extra payments.
📌 Total Housing Cost is More Than Mortgage:
Budget for the full PITI (Principal, Interest, Taxes, Insurance) plus HOA and maintenance. On $400K home: mortgage $2,528 + property tax $500 + insurance $125 + HOA $300 + maintenance $333 = $3,786 total monthly housing cost. That's 50% more than mortgage alone. Don't qualify based only on mortgage payment—lenders consider full PITI in debt-to-income ratio.
❓ Frequently Asked Questions
How much house can I afford?
General rule: house price should be 2.5-3 times your annual income. With $100,000 income, target $250,000-300,000 home. Monthly payment (PITI) should not exceed 28% of gross income ($2,333/month on $100K income). Lenders also check back-end ratio: all debt (mortgage + car + student loans + credit cards) shouldn't exceed 36-43% of income. Save 20% down plus 3-6 months emergency fund before buying.
Should I get a 15-year or 30-year mortgage?
Choose 15-year if: (1) You can comfortably afford higher payment (2) You're 40+ years old wanting to pay off before retirement (3) Want to save maximum interest (4) Have stable high income. Choose 30-year if: (1) Need lower payment for flexibility (2) Want to invest difference instead (3) Younger with other financial priorities (4) Job security uncertain. You can always pay extra on 30-year to match 15-year payoff, maintaining flexibility.
What credit score do I need for best rates?
Best rates: 760+ credit score (qualify for lowest rates). Good rates: 700-759 (slightly higher, still competitive). Fair: 640-699 (0.5-1% higher rates). Below 620: difficult to get conventional mortgage, may need FHA (3.5% down) or subprime lender (much higher rates). Every 20-point drop costs 0.25-0.5% in rate. Improve score before applying: pay down debt, fix errors, don't open new credit. Even going from 680 to 760 can save $50,000+ over loan life.
Should I pay points to lower my interest rate?
Mortgage points cost 1% of loan amount to reduce rate by ~0.25%. On $400K loan, 1 point = $4,000 upfront to save ~$60/month. Break-even is 67 months (5.5 years). Buy points if: (1) You'll stay in home 7+ years (2) Have extra cash (3) Want lower payment (4) In high tax bracket (points are deductible). Don't buy points if: (1) Moving in <5 years (2) Cash-strapped (3) Can invest that money at higher return (4) Might refinance soon.
When should I refinance my mortgage?
Refinance when: (1) Rates drop 0.75-1% below current rate (2) Credit improved significantly (3) Want to eliminate PMI (after 20% equity) (4) Need to switch ARM to fixed (5) Cash-out for major expense at lower rate than alternatives. Closing costs are 2-6% of loan amount ($8,000-24,000 on $400K), so you need ~2 years to break even. Don't refinance if: (1) Planning to move soon (2) Already 15+ years into 30-year loan (3) Extending loan term negates savings.
What is an ARM and should I get one?
Adjustable-Rate Mortgage (ARM) has fixed rate for initial period (3, 5, 7, or 10 years), then adjusts annually. 5/1 ARM: fixed 5 years, adjusts yearly after. Initial rate is 0.5-1% lower than 30-year fixed. Get ARM if: (1) You'll definitely move/refinance before adjustment (2) Expect income to increase (3) Rates likely to fall. Avoid if: (1) Staying long-term (2) Can't afford potential payment increases (3) Budget is tight. ARM caps limit increases (2% per year, 5-6% lifetime typical), but payment can still jump significantly.
⚠️ Important Disclaimer
This calculator provides estimates for educational and planning purposes only. Actual mortgage terms, rates, payments, and costs will vary based on your specific situation.
Factors affecting your actual mortgage:
- Credit score and credit history
- Debt-to-income ratio
- Employment history and income verification
- Property appraisal and location
- Loan type (conventional, FHA, VA, USDA)
- Current market interest rates (change daily)
- Lender-specific fees and requirements
Always get pre-qualified with multiple lenders, compare Loan Estimates (required within 3 days of application), and consult with mortgage professionals and financial advisors before making decisions.
👨🏫 About the Author
Adam Kumar
Co-Founder @ RevisionTown
Adam is a mathematics education expert with extensive experience across multiple international curricula including IB (International Baccalaureate), AP (Advanced Placement), GCSE, IGCSE, and various national systems. His expertise in advanced mathematical concepts, including compound interest, exponential functions, and financial modeling, enables him to create sophisticated yet accessible financial calculators.
Through RevisionTown, Adam has helped thousands of students master complex mathematical formulas and their real-world applications. This mortgage calculator applies the same rigorous mathematical principles taught in advanced mathematics courses to help people understand one of life's most significant financial commitments.
Adam's background in teaching mathematical problem-solving across diverse educational systems enables him to break down intimidating financial calculations into clear, understandable components, empowering individuals to make informed decisions about homeownership.
📧 Email: info@revisiontown.com
💼 LinkedIn: Connect with Adam