How the monthly payment is calculated
Mortgages use standard amortization: a fixed monthly payment where the split between principal and interest shifts over time. Early payments are mostly interest; later payments are mostly principal, even though the total payment stays the same every month.
Where P is the amount financed (price minus down payment), r is the monthly interest rate (annual rate ÷ 12), and n is the loan term in months.
Why the loan term matters so much
A 15-year mortgage carries a higher monthly payment than a 30-year mortgage on the same amount, but the total interest paid over the life of the loan is dramatically lower — because the balance is paid down faster, less interest accrues on it overall. Try changing the term slider to see this tradeoff directly.
Reading the amortization chart
The chart breaks down each year of the mortgage into principal paid (gray) and interest paid (orange). On a 30-year loan, the first several years are dominated by interest — the orange bar shrinks and the gray bar grows only gradually until later in the term.
Common uses
- Budgeting: checking whether a monthly payment fits your budget before house hunting.
- Term comparison: seeing how a 15-year versus 30-year term changes payment and total interest.
- Down payment planning: deciding how much to put down to hit a target monthly payment.
Frequently asked questions
Does this include property tax, insurance, or PMI?
No — it calculates principal and interest only. Property tax, homeowner's insurance, and private mortgage insurance (PMI, if the down payment is under 20%) vary too much by location and lender to include in a generic formula; your real monthly housing payment will be higher than this figure alone.
What's a typical down payment?
20% is a common benchmark that avoids PMI in many markets, but plenty of loan programs allow much less. Enter whatever down payment amount you're planning to see how it affects your payment.