🧮 Mortgage Payment Calculator
Calculate monthly payments with extra payment scenarios and full amortization schedule
How This Calculator Works
This calculator uses the standard mortgage amortization formula: M = P[r(1+r)^n]/[(1+r)^n-1] where M is the monthly payment, P is the principal loan amount, r is the monthly interest rate (annual rate ÷ 12), and n is the total number of monthly payments (years × 12).
The formula calculates your principal and interest (P&I) payment. We then add property tax and homeowners insurance to show your complete monthly housing cost, known as PITI (Principal, Interest, Taxes, Insurance). The amortization schedule shows how each payment is split between principal and interest, with early payments going mostly to interest and later payments paying down more principal.
Lenders use this exact formula to determine your monthly payment. Understanding the breakdown helps you see the true cost of borrowing and how extra payments can dramatically reduce interest paid over the loan term.
Example Calculation
Real-World Example: $300,000 Home Purchase
Purchase Details: $300,000 home, 20% down payment ($60,000), 6.75% APR, 30-year fixed mortgage
Loan Amount: $300,000 - $60,000 = $240,000
Monthly P&I Calculation: Using the formula with monthly rate 0.005625 (6.75% ÷ 12) and 360 payments: Monthly P&I = $1,556
Add PITI: $1,556 + $300 property tax + $150 insurance = $2,006 total monthly payment
Total Cost: Over 30 years, you'll pay $560,160 in P&I ($240,000 principal + $320,160 interest), plus $162,000 in taxes and insurance. Total housing cost: $722,160 for a $300,000 home.
Key Insight: You'll pay more in interest ($320k) than the original loan amount ($240k). This is why extra principal payments or shorter loan terms save so much money.
Common Questions
Should I choose a 15-year or 30-year mortgage?
15-year mortgages have higher monthly payments but save massive amounts in interest. 30-year mortgages offer lower payments and more financial flexibility. Using the $240k loan example: 15-year at 6.25% = $2,063/month, total interest $131,340. 30-year at 6.75% = $1,556/month, total interest $320,160. You save $188,820 in interest with the 15-year, but pay $507 more monthly. Choose based on your cash flow needs and long-term goals.
What percentage of my income should go toward mortgage payments?
The 28/36 rule is the standard: Keep housing costs (PITI) below 28% of gross monthly income, and total debt payments below 36%. For $6,000 monthly income, that's max $1,680 for housing and $2,160 for all debt. This ensures you can afford the payment comfortably while maintaining emergency savings, retirement contributions, and quality of life. Lenders may approve higher ratios (up to 43-50% back-end), but conservative borrowing prevents financial stress.
How much do extra payments actually save?
Extra principal payments have exponential impact because they reduce the balance that future interest is calculated on. On the $240k/30yr/6.75% loan: Adding just $100/month extra saves $64,000 in interest and pays off the loan 5 years early. Adding $300/month saves $114,000 and finishes 10 years early. One extra payment per year (divide monthly payment by 12, add to each payment) saves ~$50k and cuts 4 years. Use our calculator to model different extra payment scenarios.