Mortgage Calculator

A fixed-rate mortgage payment uses the standard amortization formula: M = P × [r(1+r)ⁿ] / [(1+r)ⁿ − 1], where P is the loan amount (home price minus down payment), r is the monthly interest rate (annual rate ÷ 12), and n is the total number of monthly payments (years × 12). The result M is the fixed monthly principal-and-interest payment. Early in the loan, most of each payment goes to interest; over time, the split shifts toward principal. An amortization schedule shows this split month-by-month. Our calculator generates the schedule automatically so you can see exactly how much of each payment reduces your loan balance.

Your true monthly housing cost is often called PITI — the four components of a complete mortgage payment. Principal is the portion that reduces your loan balance. Interest is the cost of borrowing, paid to the lender. Taxes are property taxes, typically collected monthly into an escrow account and paid to local government annually. Insurance covers homeowners insurance (protects against fire, theft, liability) and, if you put less than 20% down, mortgage insurance (PMI in the US, CMHC insurance in Canada, LMI in Australia). Lenders usually require escrow for taxes and insurance during the first few years. Our calculator shows the principal+interest figure by default; add property tax and insurance inputs to see your full PITI.

A 30-year fixed mortgage has the lowest monthly payment and maximum flexibility — the standard choice for US buyers. A 15-year fixed roughly doubles the principal portion of each payment but cuts total interest 50–70% and builds equity twice as fast. On a $320,000 loan at 6.5%, the 30-year pays ~$450,000 in interest over the life of the loan; the 15-year pays ~$180,000 — a $270,000 difference. Trade-off: the 15-year monthly payment is about 45% higher. Choose 30-year when cash flow matters or when you can invest the difference at a higher return than your mortgage rate. Choose 15-year when you can comfortably afford the higher payment and prioritize being debt-free sooner. Some borrowers take a 30-year and make voluntary extra payments — flexible middle ground.

Fixed-rate mortgages lock the interest rate for the entire loan term — predictable payments, no surprises. Adjustable-rate mortgages (ARMs) have a lower introductory rate that's fixed for an initial period (usually 5, 7, or 10 years), then adjusts annually based on a benchmark index plus margin. A 5/1 ARM means fixed for 5 years, then adjusts every 1 year. ARMs typically have caps limiting how much the rate can rise per adjustment and over the life of the loan. Pick fixed when you plan to stay 7+ years, dislike rate risk, or rates are near historical lows. Pick an ARM when you expect to move or refinance before the introductory period ends, or the rate spread justifies the risk. Most UK mortgages resemble short ARMs — 2 to 5-year initial fixed periods reverting to a Standard Variable Rate (SVR).

Down payment affects three things: your loan amount, whether you'll pay mortgage insurance, and the interest rate offered. Higher down payments reduce all three costs. US conventional loans require 3–5% minimum, but 20% is the threshold to avoid PMI. US FHA loans accept 3.5% down (with mortgage insurance premium). US VA loans (veterans) and USDA loans (rural) allow 0% down. UK buyers typically put 5–20% down; 10% or more unlocks better rates. Canadian buyers need 5% down on homes up to $500K, 10% on portions between $500K–$1.5M; less than 20% requires CMHC insurance. Australian buyers typically need 20% to avoid Lenders Mortgage Insurance (LMI), though some lenders allow 5% with LMI. Use the calculator to compare down payment scenarios side-by-side.

When your down payment is less than 20%, lenders typically require mortgage insurance that protects them against default. The name and cost structure varies by country. US: Private Mortgage Insurance (PMI) ranges 0.3%–1.5% of loan amount annually, paid monthly; automatically cancels at 78% loan-to-value or you can request removal at 80%. US FHA has a Mortgage Insurance Premium (MIP) that often persists for the life of the loan. Canada: CMHC insurance is a one-time premium of 2.8%–4% of the loan, typically added to the loan balance; required below 20% down and cannot be cancelled. Australia: Lenders Mortgage Insurance (LMI) is also a one-time premium, often $8,000–$25,000 depending on loan size and LVR. UK: Most UK mortgages don't use mortgage insurance in the same way — instead, low-deposit loans come with higher interest rates reflecting the risk.

Closing costs are fees paid at mortgage completion, separate from the down payment. In the US, expect 2–5% of loan amount (so $6,000–$15,000 on a $300,000 loan): loan origination fee, appraisal, title insurance, recording fees, prepaid interest and property tax, attorney fees. In the UK, budget for stamp duty (variable by price and buyer type), solicitor fees (£1,000–£2,000), survey (£300–£1,500) and mortgage arrangement fee. In Canada, budget for land transfer tax (varies by province, can be 1–2%), legal fees ($1,000–$2,500), home inspection and title insurance. In Australia, budget for stamp duty (state-dependent, can be 3–5%), conveyancing ($800–$2,500), and mortgage registration fee. First-time buyer exemptions reduce these in all four countries — check local rules.

The 28/36 rule is the industry standard for mortgage affordability. Keep housing costs (PITI) at or below 28% of gross monthly income — the front-end ratio. Keep total debt obligations (PITI + car loans + student loans + credit card minimums) at or below 36% of gross income — the back-end ratio. Example at $8,000 gross monthly income: front-end ceiling $2,240, back-end ceiling $2,880. Qualified mortgages in the US allow up to 43% back-end; strict lenders cap at 28/36. In the UK, affordability is stress-tested at rates 3% above the initial product rate. In Canada, the Gross Debt Service (GDS) and Total Debt Service (TDS) ratios of 39%/44% apply. In Australia, lenders assess serviceability at an interest rate buffer above the actual rate. Bottom line: the maximum you can borrow is rarely the amount you should borrow — factor in maintenance (~1% home value/year), HOA fees, lifestyle buffer.

Government programs reduce the upfront cost of buying your first home. United States: FHA loans accept 3.5% down and lower credit scores; VA loans offer 0% down for military veterans; USDA loans offer 0% down in eligible rural areas; state-level grants vary widely (DPA programs, tax credits). United Kingdom: the Lifetime ISA adds a 25% government bonus to first-home savings (up to £1,000/year); the First Homes scheme offers new-build discounts of 30–50% for qualifying buyers; Shared Ownership lets you buy 25–75% of a home and rent the rest. Canada: First-Time Home Buyer Incentive (shared equity with the government, being phased out), Home Buyers' Plan (withdraw up to $35,000 from RRSP tax-free), First Home Savings Account (FHSA — tax-deductible contributions, tax-free withdrawals for a first home). Australia: First Home Owner Grant ($10,000–$30,000, varies by state), First Home Super Saver Scheme (save in super at tax-advantaged rates), First Home Guarantee (buy with 5% deposit, no LMI). Eligibility depends on income caps, property price limits, and first-time buyer status.

Refinancing replaces your existing mortgage with a new one, typically to lower the rate, shorten the term, eliminate PMI, or switch from ARM to fixed. Calculate the break-even point: total refinance closing costs ÷ monthly payment savings = months to recoup. If you plan to stay in the home longer than break-even (usually 2–4 years), refinancing pays off. Rule of thumb: it's worth exploring when rates are 0.75%–1.0% below your current rate. Other triggers: built 20%+ equity (eliminate PMI by refinancing), fixed-rate lock before anticipated rate hikes, consolidating high-interest debt through a cash-out refi. Costs to expect: 2–6% of loan amount in fees. In the UK, 'remortgaging' at the end of a fixed period is routine — most borrowers do it every 2–5 years. In Canada and Australia, discharge fees may apply when switching lenders mid-term.

Most mortgages allow voluntary extra principal payments without penalty (check your agreement — some have limits, especially UK and Australian products in their fixed period). Two effective strategies. Bi-weekly payments: split your monthly payment in half and pay every two weeks instead. Because there are 52 weeks in a year, you make 26 half-payments = 13 full monthly payments instead of 12. One extra payment per year applied entirely to principal shaves 4–6 years off a 30-year mortgage and saves $40,000–$60,000 in interest on a typical $300,000 loan. Lump-sum extra principal: apply tax refunds, bonuses, or inheritance directly to principal. A single $10,000 principal payment in year 1 of a 30-year $300,000 mortgage at 6.5% saves about $55,000 in interest and shortens the loan by 2+ years. Confirm your lender credits extra payments to principal (not next month's payment) by specifying 'principal only' when submitting.

Stretching to the maximum approval. Lenders approve what's mathematically possible, not what's comfortable. Borrow 10–20% less than your maximum to preserve lifestyle and emergency reserves. Ignoring the total cost. Focusing only on monthly payment hides the true lifetime cost — a 30-year loan at 6.5% on $300,000 pays ~$380,000 in interest, more than the home price. Skipping rate shopping. Pulling quotes from 3–5 lenders within 14 days (counts as one credit inquiry for scoring) typically saves 0.25%+. Not factoring maintenance. Budget ~1% of home value annually for repairs, plus 2–3% for major items over 10-year cycles. Buying into a bad market or neighborhood without research. Run comparable sales, check school districts, walk the area at different times of day. Letting PMI persist after reaching 20% equity. You can request removal — it's not automatic until 78% LTV in the US. Not reading the prepayment terms before signing.