Mortgage Calculator: How to Calculate Your Monthly Payments
Learn how mortgage calculations work, understand amortization, and find out how much house you can afford.
A mortgage calculator helps you determine your monthly mortgage payments based on the loan amount, interest rate, and term. Understanding these calculations is crucial before buying a home.
How Mortgage Payments Are Calculated
Mortgage payments use an amortization formula that considers principal, interest, and loan term. The monthly payment stays constant, but the ratio of interest to principal changes over time.
- Principal: The amount you borrow
- Interest Rate: Annual percentage rate divided by 12
- Term: Loan duration (typically 15 or 30 years)
- Property Tax & Insurance: Often included in monthly payments (PITI)
Understanding Amortization
Amortization spreads payments over time. Early payments are mostly interest; later payments are mostly principal. An amortization schedule shows this breakdown for each payment.
Factors Affecting Your Payment
Down payment, credit score, loan type (fixed vs adjustable), and current market rates all impact your monthly payment. A larger down payment reduces the loan amount and may eliminate PMI (Private Mortgage Insurance).
How Much House Can You Afford?
Lenders typically want your total housing costs (PITI) to be no more than 28-31% of gross income. Use our calculators to explore different scenarios.