Finance
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 determines monthly payments based on loan amount, interest rate, and term.
How Payments Are Calculated
Mortgage payments use an amortization formula. The payment stays constant, but the interest-to-principal ratio changes over time.
- Principal: Amount borrowed
- Interest Rate: APR divided by 12
- Term: Typically 15 or 30 years
- PITI: Principal, Interest, Taxes, Insurance
Understanding Amortization
Early payments are mostly interest; later payments are mostly principal. An amortization schedule shows this breakdown.
Factors Affecting Payment
Down payment, credit score, loan type, and market rates all matter. A 20% down payment eliminates PMI.
Affordability Rule
Lenders want housing costs no more than 28-31% of gross income.
Frequently Asked Questions
What is PITI?
Principal, Interest, Taxes, and Insurance — the four mortgage payment components.
15 vs 30 year?
15-year: higher payments, less total interest. 30-year: lower payments, more total cost.
What is PMI?
Private Mortgage Insurance required with less than 20% down. Protects the lender.