Mortgage Calculator

What the monthly payment is actually made of

A fixed-rate mortgage payment is calculated so that the same amount, paid every month for the whole term, clears the balance exactly — principal plus all the interest the loan will ever accrue. The formula is not intuitive, but the shape of what it produces is: interest is charged on the balance that is still outstanding, so interest is largest in the first month, when almost nothing has been repaid, and shrinks slowly from there.

Take a $300,000 loan at 6.5% over 30 years. The payment is $1,896.20 a month. In the first month, $1,625.00 of that is interest and only $271.20 reduces the balance. The loan charges $382,633 in interest over its life — more than the amount borrowed.

The turning point, where more of the payment goes to principal than to interest, arrives at month 233 — just past 19 years into a 30-year loan. For the first 19 years you are mostly renting the money. That single fact explains most of the advice on this page: anything that reduces the balance early has an outsized effect, because it removes interest that would otherwise have compounded for decades.

It also explains the appeal of a shorter term. The same $300,000 at 6% over 15 years costs $2,531.57 a month — $635 more — but the total interest falls from $382,633 to $155,683. You pay more each month to pay far less in total.

Principal and interest is not what leaves your account

Lenders and listing sites quote a “monthly payment” that usually means principal and interest only. What actually leaves your account is larger, and the gap is where first-time buyers get caught out.

Property tax and home insurance are usually collected monthly into an escrow account and paid out by the servicer when the bills fall due. Your monthly figure includes them even though they are not part of the loan. HOA dues or the maintenance on a property without an HOA are a third line, and maintenance is the one people forget: a common budgeting rule is 1% of the property value per year, which on a $300,000 home is $250 a month on top of everything else.

If the down payment was under 20% of the price, there is usually mortgage insurance as well. On a conventional loan in the United States that is private mortgage insurance, and it typically disappears once the balance falls to 80% of the original value — which, notably, is itself a reason to make extra principal payments, since it can remove a whole line from the budget rather than just shaving interest.

This calculator keeps those lines separate on purpose. The hero figure is principal and interest, because that is the number you compare against a lender’s quote; the total monthly figure below it is what you should actually budget with.

Why extra payments early are worth far more than extra payments late

Because interest is charged on the outstanding balance, a dollar of extra principal in year two saves interest in every one of the following 28 years. The same dollar paid in year 25 saves interest for five years and then the loan ends anyway. The difference is not subtle.

On the $300,000 / 6.5% / 30-year loan: adding $100 a month to the payment pays the loan off in 312 months instead of 360, and cuts the total interest from $382,633 to $321,639 — $60,995 saved for $36,000 of extra payments. Adding $200 a month finishes it in 277 months, nearly seven years earlier, and saves $103,449.

Two framing points. First, every extra payment is optional and reversible in the sense that it is money you would have paid eventually; it is not a fee. Second, the comparison that matters is against what else that money could do. Paying down a 6.5% mortgage is a guaranteed, tax-free 6.5% return — which is a genuinely good deal compared with most guaranteed alternatives, and a worse one than a diversified portfolio has historically returned over long periods, with the obvious caveat that the portfolio is not guaranteed. This calculator will not answer that question for you, and any site that answers it in one sentence is selling something.

One practical note: check that additional payments are applied to the principal and not simply held as an early next payment. Servicers differ, and some will treat an extra payment as a prepayment of the following month unless you tell them otherwise, which delays the benefit by a month each time.

What this calculator models, and what it does not

It models a fixed-rate, fully amortising loan: a rate that never changes, equal payments, and a balance that reaches zero at the end of the term. That covers the most common mortgage in both the United States and China, and it is the only kind where a schedule can be produced honestly from three numbers.

It does not model an adjustable-rate mortgage, where the rate resets on a schedule and the payment after the reset depends on an index nobody can predict. It does not model interest-only periods, balloon payments, or negative amortisation. It does not model mortgage insurance, which depends on the loan-to-value ratio and the lender’s own rules, and it does not model daily-interest accrual, which some jurisdictions use and which makes the first and last payments slightly different from the rest.

The result of all that: the numbers here are a quote for a plain fixed loan, not an offer. When a lender gives you a Loan Estimate or an amortisation schedule, theirs governs — they know the fees, the payment date and the day-count convention for your jurisdiction, and this page does not.

Where it is genuinely useful is comparison. Changing the term by five years, changing the rate by a quarter of a point, adding $150 a month — those differences are exactly what this kind of model gets right, and they are the questions worth asking before you sign anything.

How to read the schedule, and how to check it against your lender

The schedule has four columns and one of them matters more than the other three: the running balance. Everything else — payment, interest, principal — is derived from it. If your lender’s statement shows the same balance for the same month, the two agree and the rest will match too. If they diverge, the lender is right and the difference is usually one of four things: a fee that was financed into the loan, an extra payment that landed a month later than you expected, a first payment date that was not exactly one month after closing, or daily-interest accrual on the first partial month.

The yearly view is the one to look at if you are planning rather than checking. Thirty rows of year totals tell you what the loan costs each year and how fast the balance falls; 360 monthly rows tell you the same thing with eleven times the detail. The monthly view is the one for reconciling a specific statement.

The CSV export writes every month with its date, the split between interest and principal, any extra payment, and the closing balance. It opens in any spreadsheet, which is the fastest way to answer questions this page does not ask — what the balance will be in the month you plan to sell, or what the interest totals come to for a particular tax year.