How this mortgage calculator works
Your monthly payment comes from three things: the loan amount (home price minus down payment), the interest rate, and the loan term. We use the standard amortization formula lenders use:
M = P × [ r(1+r)ⁿ ] / [ (1+r)ⁿ − 1 ]
where P is the loan amount, r is the monthly interest rate (annual ÷ 12), and n is the number of monthly payments (years × 12).
Why extra payments matter so much
Early in a mortgage, most of each payment goes to interest, not the balance. An extra amount each month goes straight to principal — cutting interest for the rest of the loan. Set an extra payment above and watch the total interest and payoff time drop.
What this estimate does and doesn't include
The monthly figure is principal and interest only. A real housing payment usually also includes:
- Property taxes — vary widely by location
- Homeowners insurance — required by most lenders
- PMI — often required if your down payment is under 20%
- HOA fees — for some condos and communities
How much house can you afford?
A common guideline: keep your total monthly housing payment under about 28% of your gross monthly income. Adjust the home price until the monthly payment lands in a comfortable range.
Estimates for educational purposes only — not financial advice. Actual rates, terms, and costs depend on your lender and situation.