Mortgage Calculator

A mortgage is a loan used to buy real estate, where the property itself acts as collateral. If payments stop, the lender has the legal right to foreclose and sell the home to recover the balance owed. Almost no one pays cash for a house in the U.S. — most buyers borrow the majority of the purchase price and repay it, with interest, over a fixed term (commonly 15 or 30 years).

Every mortgage payment is really two things bundled together: principal (the amount that reduces what you actually owe) and interest (the lender's fee for lending you the money). Most homeowners also pay property taxes and homeowners insurance through the same monthly payment, via an escrow account, and — if the down payment is under 20% — private mortgage insurance (PMI) on top. That combined figure is usually shortened to PITI: Principal, Interest, Taxes, Insurance.

Lenders calculate the fixed monthly principal-and-interest payment using the standard amortizing-loan formula:

This same formula is what amortizes the loan: because M stays fixed every month while the outstanding balance shrinks, the interest portion of each payment gets smaller over time and the principal portion gets larger — even though the total payment never changes.

You can work out a monthly payment by hand in five steps, or let the calculator above do it instantly:

1. Find the loan amount (P). Subtract your down payment from the home's purchase price. A $400,000 home with 10% down ($40,000) leaves a $360,000 loan.
2. Convert the annual rate to a monthly rate (i). Divide the annual interest rate by 12. A 6.8% annual rate becomes 0.068 ÷ 12 = 0.005667 per month.
3. Find the number of payments (n). Multiply the loan term in years by 12. A 30-year loan is 360 payments; a 15-year loan is 180.
4. Plug P, i, and n into the formula above to get M, the fixed monthly principal + interest payment.
5. Add taxes, insurance, and PMI (if applicable) to M to get your real total monthly housing payment — lenders and this calculator both do this automatically.

Say you're buying a $375,000 home with 20% down ($75,000), leaving a $300,000 loan on a 30-year fixed rate at 6.8% — close to the national average as of Freddie Mac's Primary Mortgage Market Survey. Because the down payment is 20% or more, there's no PMI to add.

On the very first payment, that $1,956 splits like this:

Over the full 30 years, total interest paid comes to roughly $404,000 — more than the loan itself — which is exactly why shortening the term or making extra principal payments (covered below) can save so much money. Try changing the down payment, rate, or term in the calculator above to see how your own numbers compare.

Want the full picture — loan types, PMI, closing costs, refinancing, and more? Read our complete guide, How Mortgage Works in the USA (2026 Complete Guide).