Mortgage Calculator

Your total monthly housing payment typically includes four parts, often called PITI: Principal, Interest, Taxes, and Insurance. The principal portion reduces your outstanding loan balance with each payment, steadily building your equity stake in the home. The interest portion is the lender's charge for providing the loan, and it dominates early payments due to the way amortization works — in the first year of a 30-year mortgage, roughly 80–85% of each payment goes to interest. Property taxes are collected by your lender through an escrow account and forwarded to your local government; they fund schools, roads, and public services. Homeowner's insurance protects against fire, theft, and liability and is also held in escrow. If your down payment is below 20% of the purchase price, Private Mortgage Insurance adds a fifth component — typically 0.5–1% of the loan balance annually — until you reach 20% equity. Understanding each component helps you identify where you have flexibility: extra principal payments cut interest costs, while shopping lenders can reduce fees and rate.

Even small differences in interest rates have enormous effects over a 30-year term. On a $400,000 loan, the difference between 6.0% and 7.0% adds approximately $210 per month and $75,760 in total interest over the life of the loan — more than 18% of the original loan amount in extra cost from a single percentage point. This is why rate shopping across multiple lenders before locking in can save tens of thousands of dollars. Request Loan Estimates from at least three lenders and compare the APR, not just the advertised rate, because APR includes origination fees and points that the nominal rate hides. Mortgage points are upfront fees paid to buy down your rate (1 point = 1% of the loan). Paying points makes financial sense if you plan to stay in the home long enough for the monthly savings to recoup the upfront cost — the break-even period is usually 4–7 years. Use the Rate Comparison toggle in our calculator to model multiple rate scenarios side by side and determine your personal break-even point before making a commitment.

A 15-year mortgage builds equity roughly three times faster than a 30-year loan and typically carries a lower interest rate — often 0.5–0.75 percentage points below the 30-year rate. On a $400,000 loan, choosing 15 years over 30 can save over $200,000 in total interest. However, the monthly payment is 40–50% higher, which strains monthly cash flow and limits your financial flexibility during emergencies or job transitions. The right choice depends on your income stability, other financial priorities, and risk tolerance. If you have high-interest debt, low retirement savings, or a variable income, the lower monthly obligation of a 30-year loan may make more sense even if it costs more in the long run. A practical middle path favored by many financial advisors is to take the 30-year term but commit to making one extra principal payment per year and applying any windfalls — bonuses, tax refunds — directly to principal. This strategy mimics many of the payoff benefits of a 15-year term while preserving the lower required payment as a safety net during leaner months. Use the Term Comparison tab to see the full trade-off for your specific loan amount and rate.

Making even one extra payment per year toward principal can shave 4–5 years off a 30-year mortgage and save tens of thousands of dollars in interest. The reason is straightforward: every dollar of extra principal you pay today eliminates future interest on that amount for the remaining life of the loan. On a $400,000 mortgage at 7%, a single annual extra payment of $2,000 saves roughly $38,000 in total interest and cuts about 4.5 years from the payoff date. Bi-weekly payment plans achieve a similar result automatically by splitting your monthly payment in half and paying every two weeks. This produces 26 half-payments per year — the equivalent of 13 full monthly payments instead of 12. The extra payment goes entirely to principal, compounding your savings over time. You can also make lump-sum principal payments whenever you receive a bonus, tax refund, or inheritance. Even a modest $5,000–$10,000 lump sum early in the loan term can eliminate years of payments. Use the Payoff Strategy toggle in this calculator to enter your planned extra payments and see the exact interest savings and new payoff date for your specific scenario.