Use this comprehensive Mortgage and Interest Calculator to quickly determine your monthly payments, the total interest you will pay over the loan term, and the overall cost of borrowing.
Mortgage and Interest Calculator
Please enter valid positive numbers for all fields.
Monthly Payment: $0.00
Total Interest Paid: $0.00
Total Cost (Principal + Interest): $0.00
Enter values and click Calculate to see the detailed steps.
Mortgage Payment Formula
$$ M = P \left[ \frac{i (1 + i)^n}{(1 + i)^n – 1} \right] $$ Where: P = Principal, i = Monthly Rate, n = Total Payments
Formula Source 1: Investopedia, Formula Source 2: The Balance
Variables Explained
- Principal Loan Amount: The total amount of money borrowed (P).
- Annual Interest Rate (%): The yearly percentage rate charged for borrowing the principal (R).
- Loan Term (Years): The number of years over which the loan will be repaid (T).
Related Calculators
Explore other financial tools:
- Compound Interest Calculator
- Debt-to-Income (DTI) Ratio Calculator
- Home Affordability Calculator
- Amortization Schedule Generator
What is a Mortgage and Interest Calculator?
A Mortgage and Interest Calculator is a tool designed to estimate the monthly payment required to repay a loan (principal) plus the accrued interest over a specific period. It is essential for financial planning, budgeting, and comparing different loan scenarios.
The calculation is based on an amortization schedule, where a portion of each monthly payment goes towards the interest owed and the remainder reduces the principal balance. Early in the loan term, a larger portion covers interest; later, more goes toward the principal.
Understanding the total interest paid—often substantially more than the original principal—is crucial. This calculator provides both the monthly payment and the overall financial commitment.
How to Calculate Mortgage Payments (Example)
Let’s use an example: a $200,000 loan at 4.5% annual interest over 30 years.
- Determine Monthly Rate (i): Divide the annual rate by 12 and 100: $i = (4.5 / 100) / 12 = 0.00375$.
- Determine Total Payments (n): Multiply the term by 12: $n = 30 \text{ years} \times 12 = 360 \text{ payments}$.
- Apply the Formula: Plug P=$200,000$, i=$0.00375$, and n=$360$ into the amortization formula.
- Calculate Monthly Payment (M): M is approximately $1,013.37$.
- Calculate Total Cost: $360 \times 1,013.37 = \$364,813.20$.
- Calculate Total Interest: Total Cost – Principal: $\$364,813.20 – \$200,000 = \$164,813.20$.
Frequently Asked Questions (FAQ)
Q: Does the monthly payment change?
A: The monthly principal and interest payment is fixed for a conventional fixed-rate mortgage. However, the total payment (including escrow for taxes/insurance) can change.
Q: How does the loan term affect total interest?
A: Generally, a shorter loan term (e.g., 15 years instead of 30) results in a significantly lower total interest paid, despite having a higher monthly payment.
Q: Is property tax included in this calculation?
A: No. This calculator only determines the principal and interest portion of your monthly payment. Property taxes and home insurance (PITI) are separate.
Q: Can I use this for variable rate mortgages?
A: This calculator is designed for fixed-rate mortgages. It can be used to model payments for specific interest rate periods of an adjustable-rate mortgage (ARM).