How this works

A mortgage payment is calculated using an amortization formula. The lender takes your loan amount (home price minus down payment), applies your annual interest rate divided into monthly increments, and solves for the fixed monthly payment that reduces the balance to exactly zero on the last payment of the term. That monthly figure never changes for a fixed-rate loan — but what's happening inside it does.

In the early months of a 30-year mortgage, the vast majority of each payment goes toward interest, not principal. On a $300,000 loan at 6.5%, the very first payment might be around $1,896 — but only roughly $271 of that reduces what you owe; the remaining $1,625 is interest. By the final year, those proportions flip almost completely. This is why extra principal payments made early in the loan have such a dramatic impact: they eliminate years of back-loaded interest at once.

The calculator also separates out property tax and homeowners insurance because most lenders require these to be collected monthly into an escrow account alongside your principal and interest. The total you send your servicer each month includes all four components, even though only the P&I portion pays down your loan balance.

What's not included

A few costs this estimate doesn't capture:

Private mortgage insurance (PMI)

If your down payment is less than 20% of the home price, most conventional lenders require PMI — typically 0.5–1.5% of the loan amount per year, added to your monthly payment until you reach 20% equity.

HOA fees

Condos, townhomes, and many planned communities charge monthly homeowners association fees that are separate from your mortgage payment entirely.

Closing costs

Origination fees, title insurance, appraisal, and other one-time costs at closing typically add 2–5% of the loan amount and aren't financed into the loan in most cases.

15-year vs. 30-year: what the numbers actually show

The difference between a 15-year and a 30-year mortgage isn't just the payment timeline — it's a fundamentally different financial product. On a $300,000 loan at 6.5%, a 30-year term produces a monthly P&I payment of about $1,896 and total interest of roughly $382,000. The same loan over 15 years has a payment of about $2,613 — $717 more per month — but total interest drops to around $170,000. You pay roughly $212,000 less in interest, and you own the home outright 15 years sooner.

Whether that $717/month difference is better deployed toward the mortgage or elsewhere (retirement accounts, other investments, emergency fund) depends on your specific situation and interest rate environment. There's no universal right answer.

How interest rate affects the total cost

Small rate differences compound dramatically over 30 years. On a $350,000 loan, the difference between a 6.0% and a 7.0% rate is about $220/month in payment — but over the full term it's a difference of nearly $80,000 in total interest paid. This is why shopping multiple lenders and negotiating even 0.25% off your rate is worth significant effort before closing.

Frequently asked

Why does my total interest look so high?

Over a 30-year term, it's common for total interest paid to approach or exceed the original loan amount, especially at higher rates. On a $300,000 loan at 7%, you'd pay roughly $418,000 in interest alone over 30 years. Shortening the term, making a larger down payment, or making extra principal payments can each reduce this substantially.

Does this account for extra payments?

This shows the standard fixed monthly schedule. Adding even $100–200 extra per month toward principal on a 30-year mortgage can cut years off the loan and save tens of thousands in interest — a separate amortization tool or your servicer's payoff calculator is the best way to model specific extra-payment scenarios.

What's a "good" interest rate?

Rates vary by loan type, term, credit score, down payment, and current market conditions. The best benchmark is to get quotes from at least three lenders on the same day for the same loan scenario — the spread between them often reveals room to negotiate.

How does the down payment affect the loan?

A larger down payment reduces the loan principal (and therefore both the monthly payment and total interest), eliminates or reduces PMI requirements, and typically results in a slightly better interest rate offer from lenders. The trade-off is less cash on hand at closing.

What's an escrow account?

Lenders collect one-twelfth of your annual property tax and homeowners insurance premium each month and hold it in escrow, then pay those bills on your behalf when they come due. It ensures the bills get paid and protects the lender's collateral interest in the property.