Mortgage Calculator

Understand Your Home Loan with the Mortgage Calculator

Our Mortgage Calculator makes it easy to estimate your monthly mortgage payments, including optional costs like insurance, taxes, and more. You can also factor in extra payments or adjust for yearly increases in typical homeownership expenses. This tool is primarily designed for users in the United States.

What Is a Mortgage?

A mortgage is a home loan secured by real estate. Essentially, it’s money borrowed—usually from a bank or lender—to purchase a home. The lender pays the seller upfront, and the buyer repays the loan over time, typically over 15 or 30 years in the U.S.

Monthly payments include both the principal (the original amount borrowed) and interest (the lender’s charge for borrowing). Many U.S. mortgages also involve an escrow account to cover property taxes and insurance.

Homebuyers don’t fully own the property until the loan is completely paid off. The 30-year fixed-rate mortgage is the most common type in the U.S., representing up to 90% of all mortgages, and it’s the primary path to homeownership for most Americans.

Key Elements of a Mortgage (and the Calculator)

The mortgage calculator works by considering the following major components:

• Loan Amount – This is the total borrowed from the lender, which is typically the home’s price minus the down payment. Loan limits often depend on income and affordability. (Check out our House Affordability Calculator for guidance.)

• Down Payment – This is the upfront cost paid by the buyer. It’s often around 20% of the purchase price, though some loans allow as little as 3%. A down payment under 20% usually triggers private mortgage insurance (PMI), which continues until the loan’s principal drops below 80% of the home’s value.

• Loan Term – This is the duration of the mortgage, usually 15, 20, or 30 years. Shorter terms generally offer lower interest rates.

• Interest Rate – The cost of borrowing, shown as a percentage. Fixed-rate mortgages (FRMs) have steady rates, while adjustable-rate mortgages (ARMs) may change over time. This calculator supports fixed-rate scenarios.

Ongoing Costs of Owning a Home

Beyond the monthly mortgage, homeownership comes with other recurring expenses. These often increase over time and are important to include in your planning.

Included in the Calculator:

• Property Taxes – Local governments (city or county) assess these yearly. The national average is about 1.1% of the property’s value.

• Homeowners Insurance – Covers damage to the property and personal liability. Costs vary by location, property type, and coverage level.

• PMI (Private Mortgage Insurance) – Required when your down payment is under 20%. Rates range from 0.3% to 1.9% annually, based on your credit, loan amount, and down payment size.

• HOA Fees – Some homes, especially condos and townhomes, have monthly or yearly fees set by a homeowners association for community maintenance.

• Other Expenses – This includes utilities, repairs, and maintenance. A common estimate is 1% of the property’s value per year for upkeep.

You can also input estimated annual increases for these costs using the “More Options” section of the calculator.

One-Time and Hidden Costs

Although not part of the monthly mortgage, there are upfront and occasional expenses you should prepare for:

• Closing Costs – These are fees due at the end of a real estate deal. They include appraisals, legal fees, title services, and more. Closing costs can easily reach $10,000 on a $400,000 home.

• Renovation Costs – Many buyers choose to remodel or update their new home before moving in. These are optional but can significantly increase early expenses.

• Moving and Setup Costs – New furniture, appliances, and moving services can also add to the initial financial burden.

Paying Off Your Mortgage Faster

Making extra payments can reduce your interest cost and shorten the life of your loan. Our calculator lets you include:

• Monthly extra payments

• Yearly lump-sum payments

• One-time additional payments

Common Strategies:

1. Extra Monthly Payments – Putting a little extra toward your loan each month can significantly cut your interest over time.

2. Biweekly Payments – Pay half your monthly mortgage every two weeks. That’s 13 full payments per year instead of 12.

3. Refinancing – Switch to a shorter-term loan with a lower interest rate. Keep in mind this may raise your monthly payments and include new closing costs.

Benefits of Early Repayment

• Interest Savings – Reducing your principal sooner lowers the total interest paid.

• Debt Freedom – Being mortgage-free can bring emotional and financial relief.

• Financial Flexibility – Freeing up cash for other investments or purchases.

Things to Consider Before Paying Off Early

• Prepayment Penalties – Some loans charge fees for early repayment. These usually expire within a few years.

• Opportunity Costs – Investing money elsewhere (e.g., stocks or retirement) might offer higher returns than paying off a low-interest mortgage.

• Reduced Tax Deductions – Mortgage interest may be tax-deductible for those who itemize. Lower payments = smaller deductions.

• Liquidity Issues – Extra payments tie up your cash in the home, making it harder to access in emergencies.

A Brief Look at Mortgage History in the U.S.

In the early 1900s, buyers often had to put down 50% and repay the loan in just a few years—making homeownership inaccessible for many. During the Great Depression, mass foreclosures led to the creation of federal programs like the FHA and Fannie Mae, which introduced longer loan terms and affordable down payments.

After World War II, these programs helped returning soldiers buy homes, sparking suburban growth. Despite challenges like the 2008 housing crisis, today’s mortgage system continues to be supported by institutions like the FHA and Fannie Mae, helping millions of Americans buy homes.