You only need eight pieces of information to calculate your mortgage payment with our mortgage calculator:
If you’re an old-school math whiz, here’s the formula embedded in the mortgage calculator:
A = Payment amount per period
P = Initial principal balance (loan amount)
r = Interest rate per period
n = Total number of payments or periods
The mortgage calculator generates a payment estimate that includes principal, interest, taxes and insurance payment — also known as a PITI payment. These four key components help you estimate the total cost of homeownership. Here’s a breakdown of each:
Your mortgage principal represents how much you’ll pay each month toward your loan balance.
The interest shown on your mortgage is how much you’ll pay in interest charges each month, which are the costs associated with borrowing money.
The calculator divides your annual property tax bill by 12 to calculate this monthly amount.
Your annual homeowners insurance premium is divided by 12 to calculate this monthly amount that is added to your payment.
Even if you have a fixed-rate mortgage, there are some scenarios that could result in a higher payment:
There are a lot of important money choices to make when you buy a home. A mortgage calculator can help you decide if you should:
Think a shorter term will work for you? See 15-year mortgage rates
You can use a mortgage payment calculator to help manage your budget and see how a mortgage payment will impact your overall finances. You can use the results to:
Determine your debt-to-income (DTI) ratio. Lenders calculate your DTI ratio by dividing your total monthly debt — including your new mortgage payment — by your pretax income. The Consumer Financial Protection Bureau (CFPB) recommends keeping your DTI ratio at 43% or less. However, some loan programs allow up to a 50% DTI ratio if you have excellent credit and extra savings. Here’s an example:
Analyze your cash flow budget with a house payment. It’s important to plug your mortgage payment into your budget for two reasons:
Try one or all of the following tips to reduce your monthly payment:
→ Choose the longest term possible. A 30-year fixed-rate loan will give you the lowest monthly payment when compared to shorter-term loans.
→ Make a bigger down payment. Your principal and interest payments will drop with a smaller loan amount, and you’ll reduce your PMI premium. With a 20% down payment, you’ll eliminate the need for PMI altogether.
→ Consider an adjustable-rate mortgage (ARM). If you only plan to live in your home for a few years, ask about an ARM loan. The initial rate is typically lower than fixed rates for a set time period; once the teaser rate period ends, the rate adjusts based on the ARM term you choose.
→ Shop for the best rate possible. LendingTree data show that comparing quotes from three to five lenders can save you big on your monthly payments and interest charges over your loan term.