How do I calculate my monthly mortgage payment?

Use the standard amortization formula: M = P · [r(1+r)^n] / [(1+r)^n - 1], where M is monthly payment, P is the loan principal, r is the monthly interest rate (annual rate ÷ 12), and n is the number of monthly payments (loan term in years × 12). Example: $300,000 loan at 6.5% for 30 years → r = 0.005417, n = 360 → M = $1,896. Add property tax, homeowners insurance and (if down payment under 20%) PMI to get the full PITI payment.

How much mortgage can I afford?

Lenders use two debt-to-income (DTI) ratios. Front-end DTI (housing only): your monthly mortgage payment, taxes and insurance should not exceed 28% of gross monthly income. Back-end DTI (all debt): mortgage plus all other debt payments (cars, student loans, credit cards) should stay below 36-43%, depending on the lender and loan type. Example: $8,000 gross monthly income → max housing payment ~$2,240. The mortgage affordability calculator works backwards from your income, debts and down payment to give you a maximum loan amount.

Should I choose a 15-year or 30-year mortgage?

30-year: lower monthly payment, higher total interest paid, more cash flow flexibility. 15-year: higher monthly payment, dramatically lower total interest (often half), faster equity buildup, lower interest rate (typically 0.5-0.75% lower). On a $300,000 loan at 6.5%, 30-year total interest is ~$382,000 vs 15-year (at ~5.875%) ~$148,000 — a $234,000 difference. Pick 15-year if you can comfortably afford the higher payment and want to minimize total cost; pick 30-year for cash-flow flexibility or if you plan to invest the payment difference at higher returns.

How much down payment do I need?

United States conventional loan: 20% down avoids PMI (~0.5-1% of loan annually); FHA loans accept 3.5% down; VA loans (military) and USDA loans (rural) accept 0%. United Kingdom: 5-10% minimum, 25%+ for best rates. Canada: 5% on the first $500,000 plus 10% above, capped at 20% to avoid CMHC mortgage insurance. Australia: 5-20%, with Lenders Mortgage Insurance (LMI) below 20%. The down payment calculator works backwards from a target home price and your savings to show how much loan you need and whether you will pay PMI/CMHC/LMI.

When does refinancing a mortgage make sense?

Refinancing makes sense when your break-even point (closing costs ÷ monthly payment savings) is shorter than your remaining time in the home. Example: $4,000 closing costs and $200/month savings → break-even = 20 months. If you plan to stay 5+ years, refinance saves money. Rate of thumb: rates need to drop at least 0.5-1% below your current rate to justify refinancing; smaller drops rarely beat closing costs. Cash-out refinancing trades equity for cash at mortgage rates (lower than personal loans), useful for major renovations or debt consolidation.

Mortgage Calculators for Every Stage of Home Buying

A mortgage is the largest financial commitment most people ever make — and the right calculations before you sign can save you tens of thousands of dollars over the life of the loan. Use our mortgage calculators to estimate monthly payments (PITI: principal, interest, taxes, insurance), check affordability against your income, compare 15-year vs 30-year terms, plan a down payment, see refinance break-even points, and view a full amortization schedule. Built for the four major English-speaking markets (US, UK, Canada, Australia) with local terminology and rates.

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Mortgage Math: Payments, Affordability, Refinancing, and Term Choice

Mortgages are governed by a single core formula — the amortization equation — but the surrounding decisions (term length, rate type, down payment, refinancing) compound into tens of thousands of dollars in lifetime cost differences. The same loan amount can cost wildly different amounts depending on these choices. Below: the math behind monthly payments, how lenders determine affordability, the 15-vs-30-year tradeoff, and when refinancing pays off.

The amortization formula behind every mortgage payment

Every monthly mortgage payment splits into principal (paying down the loan balance) and interest (the cost of borrowing). The standard amortization formula is M = P · [r(1+r)^n] / [(1+r)^n - 1], where M is the monthly payment, P is the loan principal, r is the monthly interest rate (annual rate ÷ 12), and n is the total number of payments (years × 12). On a $300,000 loan at 6.5% for 30 years, the monthly payment is $1,896. In month 1, $1,625 goes to interest and only $271 to principal — by month 360, almost the entire payment is principal. The amortization schedule shows this split for every month, and viewing it is often eye-opening: in the first 5 years of a 30-year mortgage, you pay down only ~7% of the principal.

Affordability: the 28/36 rule and DTI ratios

Lenders evaluate affordability using debt-to-income (DTI) ratios. The conservative '28/36' guideline: your monthly housing payment (PITI) should stay under 28% of gross monthly income, and your total monthly debt payments (housing plus cars, student loans, credit cards) should stay under 36%. Lenders may stretch back-end DTI to 43-50% for qualified buyers, but those payments leave little room for emergencies, retirement saving or lifestyle. Example: $8,000 gross monthly income → max housing $2,240, max total debt $2,880. From this, work backwards: at 6.5% interest with 20% down, $2,240/month supports a ~$355,000 home. Affordability calculators automate this reverse calculation.

15-year vs 30-year vs ARM: term length tradeoffs

Three common mortgage terms produce dramatically different total costs. 30-year fixed: lowest monthly payment, highest total interest, most predictable cash flow. On $300,000 at 6.5%, monthly = $1,896, total interest = $382,000. 15-year fixed: higher monthly payment but typically lower rate (~5.875%) and dramatically less interest. Same loan: monthly = $2,512, total interest = $148,000 — a $234,000 lifetime savings. Adjustable-rate mortgage (ARM): low introductory rate (5/1, 7/1, 10/1 ARMs are most common) that adjusts after the fixed period. ARMs save money if you sell before the adjustment kicks in, but expose you to rate-rise risk. Pick 30-year for flexibility, 15-year to minimize lifetime cost, ARM only if you have a clear shorter-term plan.

Mortgage Calculators for Every Stage of Home Buying

Amortization Calculator