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 it 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 — the portion that reduces your loan balance.
• Interest — the cost of borrowing, paid to the lender.
• Taxes — property taxes, usually collected monthly into an escrow account and paid to local government annually.
• Insurance — homeowners insurance (fire, theft, liability) plus, if you put less than 20% down, mortgage insurance (PMI in the US, CMHC in Canada, LMI in Australia).

Lenders usually require escrow for taxes and insurance during the first few years. Our calculator shows principal + interest 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 about $450,000 in interest over its life; the 15-year pays about $180,000 — a $270,000 difference. The trade-off: the 15-year monthly payment is roughly 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 want to be debt-free sooner.

Some borrowers take a 30-year and make voluntary extra payments — a flexible middle ground.

Fixed-rate mortgages lock the interest rate for the entire term — predictable payments, no surprises. Adjustable-rate mortgages (ARMs) start with a lower introductory rate fixed for an initial period (usually 5, 7, or 10 years), then adjust annually based on a benchmark index plus a margin. A 5/1 ARM is fixed for 5 years, then adjusts every year; caps limit how much the rate can rise per adjustment and over the loan's life.

• 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 intro period ends, or the rate spread justifies the risk.

Most UK mortgages resemble short ARMs — a 2 to 5-year initial fixed period 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.

• US: conventional loans need 3–5% minimum, but 20% avoids PMI; FHA accepts 3.5%; VA (veterans) and USDA (rural) allow 0%.
• UK: typically 5–20% down; 10%+ unlocks better rates.
• Canada: 5% on homes up to $500K, 10% on portions $500K–$1.5M; under 20% requires CMHC insurance.
• Australia: usually 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 under 20%, lenders typically require mortgage insurance that protects them against default. The name and cost vary by country:

• US — PMI: 0.3%–1.5% of the loan annually, paid monthly; auto-cancels at 78% loan-to-value (or request removal at 80%). FHA's MIP often lasts the life of the loan.
• Canada — CMHC: a one-time premium of 2.8%–4%, usually added to the loan balance; required below 20% down and non-cancellable.
• Australia — LMI: a one-time premium, often $8,000–$25,000 depending on loan size and LVR.
• UK: no mortgage insurance as such — low-deposit loans simply carry higher interest rates reflecting the risk.

Closing costs are fees paid at completion, separate from the down payment:

• US: 2–5% of the loan ($6,000–$15,000 on a $300,000 loan) — origination fee, appraisal, title insurance, recording, prepaid interest and property tax, attorney fees.
• UK: stamp duty (varies by price and buyer type), solicitor fees (£1,000–£2,000), survey (£300–£1,500), and a mortgage arrangement fee.
• Canada: land transfer tax (1–2% by province), legal fees ($1,000–$2,500), home inspection, title insurance.
• Australia: stamp duty (3–5%, state-dependent), conveyancing ($800–$2,500), 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:

• Front-end (28%): keep housing costs (PITI) at or below 28% of gross monthly income.
• Back-end (36%): keep total debt (PITI + car, student, and credit-card minimums) at or below 36%.

At $8,000 gross monthly income that's a $2,240 housing ceiling and a $2,880 total-debt ceiling. US Qualified Mortgages allow up to 43% back-end; the UK stress-tests at 3% above the product rate; Canada uses GDS/TDS ratios of 39%/44%; Australia adds a serviceability rate buffer.

Bottom line: the maximum you can borrow is rarely the amount you should borrow — leave room for maintenance (~1% of home value a year), HOA fees, and a lifestyle buffer.

Government programs cut the upfront cost of a first home:

• US: FHA (3.5% down, lower credit scores), VA (0% for veterans), USDA (0% rural), plus varied state down-payment-assistance grants and tax credits.
• UK: Lifetime ISA (25% government bonus, up to £1,000/year), First Homes (30–50% new-build discounts), Shared Ownership (buy 25–75%, rent the rest).
• Canada: Home Buyers' Plan (withdraw up to $35,000 from an RRSP tax-free) and the First Home Savings Account (FHSA — tax-deductible in, tax-free out).
• Australia: First Home Owner Grant ($10,000–$30,000 by state), First Home Super Saver Scheme, and First Home Guarantee (5% deposit, no LMI).

Eligibility depends on income caps, price limits, and first-time-buyer status.

Refinancing replaces your mortgage with a new one — to lower the rate, shorten the term, drop PMI, or switch from an ARM to fixed. The key test is the break-even point: total refinance closing costs ÷ monthly savings = months to recoup. If you'll stay longer than break-even (usually 2–4 years), it pays off.

Worth exploring when:

• Rates are 0.75%–1.0% below your current rate.
• You've built 20%+ equity (refinance to drop PMI).
• You want to lock a fixed rate before hikes, or consolidate high-interest debt via cash-out.

Expect 2–6% of the loan in fees. In the UK, 'remortgaging' at the end of a fixed period is routine (every 2–5 years); in Canada and Australia, discharge fees may apply mid-term.

Most mortgages allow voluntary extra principal payments without penalty (check your agreement — UK and Australian products may limit this during the fixed period). Two effective strategies:

• Bi-weekly payments: pay half your monthly amount every two weeks. With 52 weeks a year, that's 26 half-payments = 13 full payments instead of 12 — one extra per year. It shaves 4–6 years off a 30-year loan and saves $40,000–$60,000 on a typical $300,000 mortgage.
• Lump-sum principal: apply tax refunds, bonuses, or inheritance directly to principal. A single $10,000 payment in year 1 of a 30-year $300,000 loan at 6.5% saves about $55,000 in interest and cuts 2+ years.

Confirm your lender applies extra payments to principal (not next month's payment) by specifying 'principal only'.

Avoid these frequent, costly mortgage mistakes:

• Stretching to the maximum approval — borrow 10–20% below your ceiling to preserve lifestyle and emergency reserves.
• Ignoring total cost — a 30-year loan at 6.5% on $300,000 pays ~$380,000 in interest, more than the home price.
• Skipping rate shopping — quotes from 3–5 lenders within 14 days count as one credit inquiry and typically save 0.25%+.
• Forgetting maintenance — budget ~1% of home value a year, plus 2–3% for major items over 10-year cycles.
• Not researching the market or neighborhood — check comparable sales, school districts, and walk the area at different times.
• Letting PMI persist past 20% equity — request removal; it's not automatic until 78% LTV in the US.
• Not reading the prepayment terms before signing.