What is a mortgage calculator?
A mortgage calculator estimates what it may cost to repay a home loan. Unlike a simple loan calculator, a home purchase often adds property taxes, homeowners insurance, mortgage insurance, and HOA or service charges to the monthly budget.
Mortgage payment formula
For a fixed interest rate and monthly repayment, the principal-and-interest payment is:
Payment = L × r ÷ [1 − (1 + r)^(-n)]
Here L is the amount borrowed, r is the annual rate divided by 12 and by 100, and n is the number of monthly payments. At a 0% rate, the payment simplifies to L ÷ n.
Worked example
Suppose a home costs $400,000, with a $80,000 down payment, a 6.5% annual interest rate, and a 30-year term. You borrow $320,000. The monthly principal and interest is about $2,022.62. If property taxes total $4,800 per year and insurance $1,800 per year, those add another $550 monthly, before PMI or HOA charges.
How to use the calculator
Enter your home price, down payment, annual note interest rate, and repayment term. You can optionally estimate annual property tax, insurance, HOA fees, an annual mortgage insurance rate, and extra monthly principal payments. The result summarizes first-month costs and the modeled balance schedule.
Down payment and loan-to-value ratio
The loan-to-value (LTV) ratio compares the outstanding loan balance with the home value. A larger down payment generally lowers the starting LTV. The PMI model here is deliberately simplified; actual eligibility, pricing, and cancellation depend on the loan program and servicer.
Paying extra principal
Additional principal payments may shorten the mortgage term and reduce interest. They do not necessarily reduce the contractually scheduled monthly principal-and-interest payment unless your lender formally recasts or refinances the mortgage.
Understanding the assumptions
The calculator models a fixed annual note rate, monthly installments, and recurring costs held constant until payoff. Its PMI estimate uses an approximate annual charge that stops when outstanding principal reaches 80% of the original purchase price. It omits closing costs, discount points, maintenance, appreciation, rate changes, and taxes or insurance increases. These are planning estimates, not lender offers.