Mortgage Calculator

A mortgage payment is really several payments stapled together, and the headline number most people quote — principal and interest — is only part of what leaves your account each month. Property taxes, homeowners insurance and any HOA dues usually get collected alongside it, often into an escrow account, and they can add several hundred dollars to the total.

The principal-and-interest figure comes from the standard amortisation formula. Each month you pay interest on whatever balance remains, and the rest of your payment reduces that balance. Early on, the balance is large, so most of the payment is interest; later, as the balance falls, more goes to principal. That is why after five years of a thirty-year loan you may have paid a great deal and still owe nearly the original amount. The crossover point, where principal finally exceeds interest, arrives surprisingly late.

Term length changes the picture more than any other input. Stretching from fifteen to thirty years cuts the monthly payment substantially but raises the total interest dramatically, because you are paying interest for twice as long. A shorter term does the reverse: a higher monthly obligation in exchange for a much smaller lifetime cost. Comparing the two side by side, the difference in total interest is often the price of a car.

Watch the down payment as well. Below twenty per cent, most lenders add mortgage insurance, which protects them rather than you and disappears only once you have enough equity. A larger down payment also tends to earn a slightly lower interest rate, so the saving compounds twice.

Finally, a mortgage calculator tells you what a loan costs, not what you can afford. Lenders will often approve more than is comfortable. A common rule of thumb is to keep total housing costs at or under about 28 per cent of gross monthly income, and all debt payments under about 36 per cent. This calculator provides general estimates for planning; your lender's official figures, including closing costs and fees, are the ones that count.

This calculator returns estimates for general information only. It is not financial, investment, tax or legal advice, and it cannot replace guidance from a qualified professional who knows your circumstances. Figures such as loan payments, investment growth and retirement projections are simplified models based on the inputs and assumptions you provide, not guarantees of future results.