Use our simple online mortgage calculator to quickly estimate your monthly principal and interest payments, helping you budget accurately for your new home or refinance project.
online mortgage calculator
Estimated Monthly Payment (P&I)
$0.00This excludes taxes and insurance (PITI).
online mortgage calculator Formula
Monthly Payment (M) is calculated using the amortization formula:
M = P [ i(1 + i)ⁿ / ((1 + i)ⁿ − 1) ]
Where: P = Principal Loan Amount, i = Monthly Interest Rate, n = Total number of payments.
Formula Source: Bankrate | Wikipedia
Variables Explained
- Loan Principal Amount: The initial amount of money borrowed for the mortgage. This is typically the purchase price minus your down payment.
- Annual Interest Rate: The nominal percentage rate charged by the lender per year. This value is used to determine the monthly interest.
- Loan Term (Years): The length of time (in years) over which you agree to repay the loan. Common terms are 15 or 30 years.
- Monthly Payment (M): The fixed payment amount calculated to pay off the principal and interest over the loan term.
Related Calculators
Explore other financial tools for your homeownership journey:
- Amortization Schedule Planner
- Refinance Savings Estimator
- Debt-to-Income Ratio Calculator
- Property Tax Payment Predictor
What is online mortgage calculator?
An online mortgage calculator is a vital digital tool that estimates the cost of a mortgage loan. At its core, it uses the loan’s principal, annual interest rate, and term to calculate the monthly payment required to fully pay off the debt by the end of the term. This payment includes both the principal repayment and the accrued interest.
The primary function is to provide transparency and aid in financial planning. By adjusting inputs like the interest rate or the loan term, users can immediately see how these changes impact their monthly budget. While many calculators include estimated taxes and insurance (PITI), the base calculation focuses purely on the Principal and Interest (P&I) components.
How to Calculate online mortgage calculator (Example)
Let’s use an example: a $200,000 loan, 30-year term, and 7% annual interest rate.
- Determine Monthly Rate (i): Divide the annual rate (7% or 0.07) by 12: $i = 0.07 / 12 \approx 0.005833$.
- Determine Total Payments (n): Multiply the term in years (30) by 12 months: $n = 30 \times 12 = 360$ payments.
- Calculate Amortization Factor: Compute the complex fraction: $\frac{i(1 + i)^n}{(1 + i)^n – 1}$.
- Calculate Monthly Payment (M): Multiply the loan principal (P) by the Amortization Factor: $M = \$200,000 \times [\text{Factor}]$.
- The resulting monthly payment (P&I) is approximately $1,330.60.
Frequently Asked Questions (FAQ)
Is the calculated monthly payment my final bill?
No. The calculator provides the Principal and Interest (P&I) portion. Your final monthly payment (PITI) typically includes Property Taxes, Homeowner’s Insurance, and sometimes Private Mortgage Insurance (PMI).
Does a shorter loan term save money?
Yes. While the monthly payment will be higher (e.g., 15 years vs. 30 years), you will pay significantly less total interest over the life of the loan because you are paying down the principal faster.
What is an amortization schedule?
An amortization schedule is a table detailing every payment over the life of the loan, showing exactly how much of each payment goes toward interest and how much goes toward principal. Early payments are mostly interest; later payments are mostly principal.
What is a good interest rate?
Interest rates fluctuate daily based on economic conditions. A “good” rate is one that is competitive compared to the current average market rate for similar loan products and credit profiles.