- Your payment is fixed for the life of a fixed-rate loan, but the split between principal and interest moves every single month.
- A 20% down payment is the threshold that removes private mortgage insurance (PMI) on a conventional loan.
- Choosing a 15-year term costs more per month and saves far more in total interest than a small rate improvement does.
- The quoted payment excludes property taxes, insurance and HOA dues — budget roughly 1–1.5% of the home price a year on top.
How the mortgage calculator works
Enter a home price, a down payment, an interest rate and a term, and the calculator returns the level monthly payment that clears the loan by the end of that term. The loan amount is the price minus the down payment; everything after that is a function of the rate and the number of payments.
The payment shown is principal and interest only. Property taxes, homeowners insurance and HOA dues are real monthly costs and are usually escrowed alongside the mortgage, so they are available under Advanced options — turn them on and the headline figure becomes the total you actually pay each month.
The amortization schedule below the calculator shows where each payment goes. Early on, most of it is interest; the crossover point where principal overtakes interest arrives later than most buyers expect, which is the single most useful thing a schedule tells you.
The math
The monthly payment comes from the standard level-payment amortization formula: P = L · r · (1 + r)ⁿ ÷ ((1 + r)ⁿ − 1), where L is the loan amount, r is the annual rate divided by 12, and n is the number of monthly payments. That payment never changes over a fixed-rate loan.
Each month, interest is charged on the balance still outstanding — balance × r — and whatever is left of the payment reduces the principal. Because the balance falls every month, the interest portion falls with it and the principal portion grows, which is why the split shifts so sharply over a 30-year loan. The schedule below applies that month by month and rolls the result up into years.
US fixed-rate mortgages compound monthly, which is exactly what this formula assumes, so the payment figure matches what a lender would quote for the same inputs. What it will not match is your closing disclosure, which adds escrow, points and origination costs on top.
Worked example
On a $550,000 home with $110,000 down (20%), the loan is $440,000. At 6.5% over 30 years that is a payment of about $2,781 a month, $1,001,196 paid in total, and $561,196 of it interest — more than the down payment and the first eight years of payments combined.
Hold everything else and shorten the term to 15 years and the payment rises to roughly $3,833, but total interest falls to about $250,000. That is $1,052 more a month buying back $311,000 — the clearest illustration there is of why term length matters more than shaving a fraction off the rate.
Key terms
- Principal
- The amount you still owe. Every payment reduces it by whatever is left after that month’s interest is covered.
- Loan term
- How long the loan runs — 30, 20 or 15 years for a conventional fixed-rate mortgage. On a US fixed-rate loan the term and the amortization period are the same thing.
- Private mortgage insurance (PMI)
- Charged on conventional loans with less than 20% down. It protects the lender, not you, and can usually be cancelled once you reach 20% equity.
- Amortization schedule
- The period-by-period table of how much of each payment goes to principal, how much to interest, and what balance is left.