This calculator helps you estimate your potential monthly mortgage payment, total loan cost, and the total interest you will pay over the life of the loan. Understanding these figures is the first step toward smart homeownership.
Mortgage with Interest Calculator
Estimated Monthly Payment:
Total Interest Paid: —
Total Cost of Loan: —
Mortgage with Interest Calculator Formula
Where:
- M = Monthly Payment
- P = Principal Loan Amount
- i = Monthly Interest Rate (Annual Rate / 12)
- n = Total Number of Payments (Term in Years × 12)
Variables Explained
The calculator uses three primary variables to determine your loan’s financial metrics:
- Loan Amount (Principal): The total amount of money borrowed from the lender. This does not include any down payment or closing costs.
- Annual Interest Rate (%): The yearly percentage rate charged by the lender for the loan. This is divided by 12 to find the monthly rate.
- Loan Term (Years): The number of years you have to repay the loan (e.g., 15 years, 30 years). This determines the total number of payments (n).
Related Calculators
Explore other tools to help with your home financing decisions:
- Amortization Schedule Planner
- Refinance Cost Estimator
- Home Equity Line Calculator
- Property Tax Estimator
What is a Mortgage with Interest Calculator?
A mortgage calculator is a vital financial tool used to estimate the monthly payments required to pay off a mortgage loan. It specifically uses the amortization formula to break down how much of each payment goes toward the principal balance and how much covers the accrued interest.
The interest component is critical. Because interest is typically compounded monthly, calculating the payment manually is tedious and prone to error. This calculator provides fast, accurate figures, helping borrowers budget and compare different loan scenarios (e.g., a 15-year loan versus a 30-year loan or varying interest rates).
How to Calculate Your Mortgage Payment (Example)
- Identify Variables: Assume a principal (P) of $300,000, an annual rate (R) of 6.0%, and a term of 30 years.
- Convert Rate: Convert the annual rate to a monthly decimal rate ($i$): $6.0\% / 100 / 12 = 0.005$.
- Calculate Payments: Convert the term to the total number of payments ($n$): $30 \times 12 = 360$ payments.
- Apply Formula: Plug the values into the amortization formula to find the monthly payment (M). For this example, M would be approximately $1,798.65.
- Determine Total Interest: Multiply the monthly payment by the total number of payments ($1,798.65 \times 360 = \$647,514$). Subtract the original principal: $\$647,514 – \$300,000 = \$347,514$ in total interest paid.
Frequently Asked Questions (FAQ)
Is the monthly payment calculated here my full housing cost?
No. This calculation only covers the Principal and Interest (P&I). Your total monthly housing cost usually includes escrow payments for property taxes and homeowner’s insurance (PITI).
What is amortization?
Amortization is the process of gradually paying off a debt over time in fixed installments. Early in the loan, a larger portion of your monthly payment goes toward interest; later on, a larger portion goes toward the principal.
Does a lower interest rate save more than a shorter term?
A shorter term (e.g., 15 years) dramatically reduces the total interest paid, often more significantly than a small reduction in the interest rate over a long term (30 years). However, the monthly payment will be higher with a shorter term.
Do I need a down payment for a mortgage?
Most traditional mortgages require a down payment, often between 3% and 20% of the home price. Loans with less than 20% down usually require Private Mortgage Insurance (PMI), which adds to your monthly cost.