How this mortgage calculator works
This calculator estimates the monthly cost of a conventional fixed-rate mortgage. Enter the home price, down payment, annual interest rate and loan term. The calculator then estimates principal and interest and adds the monthly equivalents of property tax, homeowners insurance, PMI and HOA fees.
Monthly principal and interest formula
The principal-and-interest portion uses the standard fixed-rate amortization formula:
M = P × [r(1 + r)^n] ÷ [(1 + r)^n − 1]
M is the monthly principal-and-interest payment, P is the loan amount, r is the monthly interest rate, and n is the total number of monthly payments.
What the calculator fields mean
- Home price
- The purchase price of the property before the down payment.
- Down payment
- The amount paid upfront. A larger down payment reduces the amount borrowed.
- Interest rate
- The annual mortgage interest rate used to estimate principal and interest.
- Loan term
- The number of years used to repay the mortgage. Common terms include 15 and 30 years.
- Property tax
- Your estimated annual property-tax expense. Actual rates vary by location and property.
- Home insurance
- Your estimated annual homeowners-insurance premium.
- PMI
- An estimated annual PMI rate. Actual PMI pricing and cancellation rules depend on the loan and lender.
- HOA fees
- Monthly homeowners-association dues, if applicable.