Mortgage Calculator

How to use the mortgage calculator

Enter the price, the down payment, the rate you were quoted and the escrow lines, and the panel returns the whole monthly payment rather than the part a rate table shows. On the defaults that is $2,784.84 a month, of which $557 never touches the loan at all.

Why the number is bigger than the one you were quoted

A rate quote prices the loan. A payment includes everything the servicer collects with it. Property tax at 1.07 percent of $425,000 is $378.96 a month and insurance at $2,136 a year is $178.00, so the escrow lines add $556.96 before any association fee.

The first payment is almost all interest

Amortization front-loads interest, and the ratio is steeper than most people expect. Year one on these defaults puts $3,554.81 against the balance and $23,179.77 into interest — 87 percent of the first year buys nothing. Year thirty inverts it: $25,768.48 principal against $966.09 interest.

When mortgage insurance actually stops

PMI is the one line on the payment with a legal end date, and the date is set by federal law rather than by the servicer. Two thresholds do the work, and they are measured against the original value of the home — not what it is worth later.

The second threshold needs no request at all. At 78 percent of original value the servicer must terminate it, provided the payments are current. So the borrower-requested cancellation at 80 buys back a stretch of payments the automatic one would have collected.

The midpoint rule is the backstop most calculators omit: on a 30-year loan the servicer must end PMI the month after year 15 even if the balance never reached 78 percent. On an ordinary amortizing loan the 78 percent date arrives first, so the backstop rarely binds — but it exists.

Fifteen years against thirty, in one number each

The same $340,000 loan at the same 6.85 percent produces two very different arrangements, and the trade is legible in a single pair of figures rather than in argument.

Read it as $799.69 a month buying $257,074 of interest, and the arithmetic is finished. Whether that is the right use of $799.69 depends on everything this page cannot see, and the answer is not a calculator output.

What a 5/1 ARM can cost in year six

An ARM fixes the rate for five years and then adjusts annually. The first five years are exact arithmetic. Year six is not knowable, because it depends on an index nobody can forecast, so this tool reports the ceiling instead of a guess.

Index plus margin sets the new rate, subject to caps. The index moves with the market and the margin sits in your note, so neither belongs in a calculator default. The caps, though, are contractual: an initial cap limits the first jump and a lifetime cap limits the whole loan.

The formula, worked line by line

The payment is one standard amortization formula plus four additions that have nothing to do with the loan. Splitting them is the whole point: only the first responds to the rate and the term.

The amortization half is the same equation every fixed-rate loan uses. The escrow half is arithmetic on figures you supply, which is why a national-average default would make the answer worse rather than easier.

loan       = price − down payment
LTV        = loan ÷ price × 100
r          = annual rate ÷ 100 ÷ 12
n          = 360 for a 30-year term, 180 for 15
P&I        = loan × r(1 + r)^n ÷ ((1 + r)^n − 1)
tax/mo     = price × tax rate ÷ 12
PMI/mo     = loan × 0.005 ÷ 12   (only while LTV > 80)
payment    = P&I + tax + insurance + HOA + PMI

PMI triggers above 80 percent LTV, not at it. A down payment of exactly 20 percent lands on 80 and carries none, which is why that boundary is worth hitting precisely rather than approximately.

The ARM path re-amortizes rather than rescaling. The tool walks the balance through the fixed sixty payments, then computes a fresh payment on the remaining balance at the ceiling rate over the remaining months, which is what the note actually does.

The payoff date is deliberately not shown. The engine derives it from the current date, and a value that differs between a cached page and your browser is a rendering artefact rather than a fact about your loan.

Questions people ask