How to use this calculator
- Enter the Home price and your Down payment as a percentage of that price.
- Set the Interest rate you were quoted and the Loan term in years.
- Add Property tax per year, Home insurance per year and any HOA / other fees per month.
- Read the Monthly payment, then compare it with the loan amount, total interest and the year-by-year table.
How the monthly payment is calculated
A standard fixed-rate mortgage is repaid in equal monthly installments. Each installment covers that month's interest on the unpaid balance, and whatever is left reduces the principal. The installment itself is found with the annuity formula below.
M = P · r(1 + r)^n / ((1 + r)^n − 1)- M = monthly principal and interest payment
- P = loan amount (home price minus down payment)
- r = monthly interest rate (annual rate ÷ 12 ÷ 100)
- n = number of monthly payments (years × 12)
The calculator then adds one-twelfth of your yearly property tax and home insurance, plus any monthly HOA fees, to get the all-in housing payment you will actually send out each month.
Example: a $400,000 home with 20% down
With the default inputs (6.5% rate, 30 years, $4,000 property tax and $1,500 insurance a year) the loan is $320,000. Principal and interest come to $2,023 a month; taxes and insurance add $458, for a total of $2,481.
Over 30 years you would pay about $408,000 in interest, which is more than the amount you borrowed. That is normal for a long loan: interest is charged on a large balance for a long time.
What changes the payment most
Try three variations on the same house. Putting down 10% instead of 20% raises the loan to $360,000 and the payment to $2,734, and total interest to about $459,000. A 15-year term at the same rate pushes the payment to $3,246 but cuts total interest to about $182,000. A rate of 5.5% instead of 6.5% brings the payment down to $2,275.
So the term and the rate matter far more to the lifetime cost than the exact price of the house, while the down payment mainly moves the monthly figure. Use the amortization calculator to see how each payment splits between interest and principal.
How to use the result to decide
Compare the monthly payment with your take-home pay, not only your gross income. Lenders often look at the share of gross income that goes to debt, so check your ratio with the debt-to-income calculator and work backwards from a comfortable payment with the home affordability calculator.
Also keep cash for closing costs, moving, repairs and an emergency reserve. A payment you can technically afford but that leaves nothing for maintenance is a risky one.
Ways to lower the cost
- Compare offers from several lenders on the same day; a small rate difference compounds over decades.
- Choose a shorter term if the higher payment fits your budget comfortably.
- Make extra principal payments; the loan payoff calculator shows the interest saved.
- Ask whether private mortgage insurance applies when you put down less than 20%, and when it can be removed.
- Check your local property tax rate before choosing a home; it varies widely between counties.
Assumptions and limits
This tool assumes a fixed rate and equal monthly payments. It does not include private mortgage insurance, closing costs, points, origination fees, adjustable-rate resets, escrow adjustments or changes in tax and insurance over time. Property tax and insurance are treated as flat yearly amounts.
Your lender's official Loan Estimate is the figure to rely on. Use this calculator for planning and comparison, and talk to a lender or housing counselor before committing.
Frequently asked questions
How much is a mortgage payment on a $400,000 house?
It depends on the down payment, rate and term. With 20% down at 6.5% over 30 years, principal and interest are about $2,023 a month, or roughly $2,481 with typical taxes and insurance.
Does the monthly payment include property tax and insurance?
Yes. This calculator adds one-twelfth of the yearly property tax and home insurance, plus any HOA fees, to the principal and interest. Lenders often collect these in an escrow account.
Is a 15-year or 30-year mortgage better?
A 15-year loan costs much less interest but has a higher monthly payment. Choose the shortest term whose payment still leaves room in your budget.
Why is so much of my early payment interest?
Interest is charged on the remaining balance, which is largest at the start. As the balance falls, a growing share of each payment goes to principal.
Does a bigger down payment lower my rate?
It can, because the lender takes less risk, and it also removes the need for mortgage insurance at 20%. The exact effect depends on the lender and your credit.