How to Use This Calculator

1. Enter the home price — the full purchase price of the property you're considering.
2. Set your down payment — enter either a dollar amount or a percentage; the other field updates automatically. Most conventional loans require at least 3–20% down.
3. Choose a loan term — select 10, 15, 20, or 30 years. Shorter terms mean higher monthly payments but far less total interest paid over the life of the loan.
4. Enter the interest rate — use the annual rate quoted by your lender, or a current market average as a baseline for comparison.
5. Review the payment summary — your estimated monthly payment, total cost, and total interest appear instantly. Expand the amortization schedule to see the year-by-year and month-by-month breakdown.

Frequently Asked Questions

• What is a good debt-to-income (DTI) ratio for a mortgage?
  Most lenders prefer a front-end DTI (housing costs ÷ gross monthly income) under 28% and a back-end DTI (all monthly debt payments ÷ gross income) under 36–43%. FHA loans may allow up to 50% back-end DTI with compensating factors. A lower DTI generally qualifies you for better rates and larger loan amounts.
• What's the difference between interest rate and APR?
  The interest rate is the base cost to borrow the principal — it's what determines your monthly payment. The APR (Annual Percentage Rate) is broader: it includes the interest rate plus lender fees, origination costs, and points, expressed as a single annual figure. APR is the more complete comparison tool when shopping multiple lenders. This calculator uses the simple interest rate to compute monthly payments.
• How much house can I afford?
  A common starting rule is to keep your total monthly housing payment (principal, interest, taxes, and insurance) under 28% of your gross monthly income. For example, at $8,000/month gross income, aim for housing costs under $2,240/month. Use this calculator to test different home prices and down payments until the monthly payment fits within that range. Keep in mind that property taxes, homeowner's insurance, HOA fees, and PMI add to the base mortgage payment shown here.
• What credit score is needed to buy a house?
  Most conventional loans require a minimum credit score of 620. FHA loans may accept scores as low as 580 with a 3.5% down payment, or 500–579 with 10% down. VA and USDA loans do not have a government-set minimum, but lenders typically want at least 580–620. Higher scores unlock better interest rates, which can save tens of thousands over the life of the loan.
• What is PMI and how do I avoid it?
  Private Mortgage Insurance is required by most conventional lenders when your down payment is less than 20% of the home price. PMI protects the lender if you default. It typically costs 0.5–1.5% of the loan amount per year and can be removed once you reach 20% equity through appreciation or principal paydown. This calculator does not include PMI.
• Should I pay points to lower my interest rate?
  One point equals 1% of the loan amount and typically reduces your rate by about 0.25%. Paying points makes sense if you plan to hold the loan long enough for the monthly savings to recover the upfront cost — a break-even period that usually falls between 3 and 7 years. If you expect to move or refinance before then, skip the points and take the higher rate.
• Is a 30-year or 15-year mortgage better?
  A 30-year mortgage has lower monthly payments, freeing up cash for other goals. A 15-year mortgage has higher payments but saves a significant amount on total interest and builds equity faster. The right choice depends on your budget, how long you plan to stay in the home, and whether the higher 15-year payment still leaves room for savings and emergencies. Use the calculator above to compare both side by side with your own numbers.
• When should I refinance my mortgage?
  The traditional rule of thumb is to refinance when you can lower your rate by at least 0.75–1%. Also consider refinancing to eliminate PMI, switch from an adjustable to a fixed rate, shorten your loan term, or tap equity for major expenses. Calculate the break-even point: divide closing costs by your monthly savings to see how many months it takes to recoup the expense. If you plan to stay past that point, refinancing is usually worth it.

Glossary

• Amortization The process of paying off a loan through scheduled, fixed payments over time. Each payment covers both interest (front-loaded early in the loan) and principal. The amortization schedule shows exactly how these amounts shift over the life of the loan — early payments are mostly interest; later payments are mostly principal.
• Escrow An account held by your lender that collects a portion of your monthly payment to cover property taxes and homeowner's insurance. Instead of paying these large annual bills yourself, the lender pays them from the escrow balance on your behalf. Escrow is not included in the payment shown by this calculator.
• PMI Private Mortgage Insurance — required by most conventional lenders when your down payment is less than 20% of the home price. PMI protects the lender if you default. It typically costs 0.5–1.5% of the loan amount per year and can be removed once you reach 20% equity. This calculator does not include PMI.
• Points Upfront fees paid at closing to reduce your interest rate. One point equals 1% of the loan amount. Paying points (buying down the rate) makes sense if you plan to hold the loan long enough for the monthly savings to recover the upfront cost — a break-even period that typically ranges from 3–7 years.
• Principal The original amount borrowed — the loan balance after subtracting your down payment from the purchase price. Each monthly payment reduces the principal by a small amount early in the loan and increasingly more over time as the outstanding balance shrinks and interest charges decrease.

30-Year vs. 15-Year Mortgage: A $400,000 Example

On a $400,000 home with 20% down ($80,000) at 6.75% interest, the loan amount is $320,000. Here is how the two most common terms compare:

The 15-year term saves roughly $237,000 in interest but costs $756 more per month. That higher payment only makes sense if it still leaves you with an emergency fund and manageable debt-to-income ratio. Use the calculator above to test your own home price, rate, and term — the amortization schedule shows exactly how the split between principal and interest shifts over time.

What This Payment Does Not Include

The monthly figure shown by this calculator covers principal and interest only. Most homeowners also pay some or all of the following, which can add $200–$800 or more to the true monthly outlay:

• Property taxes — typically 0.5–2.5% of assessed value per year, varying widely by state and county.
• Homeowner's insurance — $80–$250/month for most single-family homes; higher in disaster-prone areas.
• PMI — required on conventional loans with less than 20% down; adds 0.5–1.5% of the loan balance per year.
• HOA fees — common for condos and planned communities; can range from $50 to $500+ per month.
• Flood or earthquake insurance — separate policies required in high-risk zones.

Lenders often collect taxes and insurance through an escrow account, rolling them into a single monthly payment alongside principal and interest. When budgeting, ask your lender for the full PITI figure (Principal, Interest, Taxes, Insurance) so you are working from the real number.

When Should You Refinance?

Refinancing replaces your current mortgage with a new one, typically to get a lower rate, change the term, or convert from an adjustable-rate to a fixed-rate loan. The decision comes down to two numbers: your monthly savings and your closing costs.

The break-even rule. Divide total closing costs by your monthly savings. If closing costs are $4,000 and you save $200 per month, you break even in 20 months. If you plan to stay in the home past that point, refinancing usually pays off.

Common refinance triggers:

• Market rates have dropped 0.75–1% or more below your current rate.
• Your home has appreciated enough to eliminate PMI (you now have 20%+ equity).
• You want to switch from a 30-year to a 15-year term to save on interest.
• You have an adjustable-rate mortgage and want the stability of a fixed rate before the adjustment period ends.
• You need cash for a major expense and want to tap equity via a cash-out refinance.

This calculator does not model refinancing directly, but you can simulate a new scenario by entering the remaining balance as the "home price," setting the down payment to zero, and adjusting the new rate and term. Compare the new monthly payment and total interest to your current loan to see if the savings justify the closing costs.