What is Mortgage Calculator?
First, let us expand on Mortgage, what is Mortgage? A mortgage is a type of loan used to buy property — most commonly, a home. But unlike other loans, a mortgage is secured by the real estate itself, which means the lender can take back the property if the borrower doesn’t make the payments.
In simple terms, here’s how it works:
You want to buy a house, but you don’t have all the cash upfront. A lender (usually a bank) steps in and gives you the money to pay the seller. In exchange, you agree to repay the loan over time, typically over 15 or 30 years. That’s your mortgage.
Why Understanding Your Mortgage Is Crucial
Each month, you’ll make a payment to your lender. That payment is split into two main parts:
Principal: This is the original loan amount you borrowed.
Interest: This is the cost you pay the lender for letting you borrow the money.
Sometimes, your monthly payment also includes property taxes and homeowners insurance through something called an escrow account. These costs can vary based on where you live and how much your home is worth.
Until you make the very last payment, your lender technically owns the home. Once the mortgage is paid off — you officially own it outright.
The Most Popular Mortgage in the U.S.
In the United States, the most common mortgage is the 30-year fixed-rate mortgage. It offers predictability because your interest rate and monthly payment stay the same for the entire loan term. In fact, this type of mortgage makes up 70% to 90% of all home loans in the U.S.
Why You Need a Mortgage Calculator
When you’re planning to buy a home (or even just thinking about it), using a mortgage calculator can help you:
Estimate your monthly mortgage payment
Understand how much house you can afford
Break down interest vs. principal
See the impact of loan term, interest rate, and down payment
Our free mortgage calculator gives you real-time results to help you make smarter home-buying decisions. Whether you’re a first-time buyer or refinancing an existing loan, this tool will save you time, money, and confusion.
Key Components of a Mortgage Calculator
When you use a mortgage calculator, you’re not just seeing a random number. It breaks down the full cost of a home loan using several important factors. Here are the main components every smart mortgage calculator should include:
Loan Amount (Principal)
This is the total amount you’re borrowing from the lender — usually the purchase price of the home minus your down payment.
Example: If the home price is $300,000 and you put $60,000 down, your loan amount is $240,000.
Loan Term
The number of years you’ll take to repay the loan — typically 15, 20, or 30 years.
Longer terms mean smaller monthly payments, but more interest paid over time.
Interest Rate
The annual percentage your lender charges to lend you the money. Even a small change in the interest rate can make a big difference in your total payment.
Example: A 5% interest rate on a $240,000 loan is much cheaper than a 6% rate over 30 years.
Monthly Payment
This is the result most people care about. It’s the total amount you’ll pay each month, including:
Principal repayment
Interest charges
Property Taxes
An annual tax paid to your local government, based on your home’s value. It’s usually added to your monthly mortgage payment.
Homeowners Insurance
This protects your home from damage, theft, or disaster. Like taxes, this can be included in your monthly payment if you have an escrow account.
PMI (Private Mortgage Insurance)
If your down payment is less than 20%, lenders may require PMI — an extra monthly cost to protect the lender in case you default.
Down Payment
This is the upfront amount you pay toward the home’s price — usually 10% to 20%, but sometimes as low as 3% depending on the loan type.
The higher your down payment, the lower your monthly mortgage payment.
Amortization Schedule
A month-by-month breakdown of how much of your payment goes to principal vs. interest. It shows how your loan balance decreases over time.
Early Repayment and Extra Payments: How They Save You Thousands
One of the most powerful strategies homeowners overlook is making early or extra payments on their mortgage. It might sound simple, but the impact can be massive — saving you years off your loan and tens of thousands in interest.
Let’s break it down.
What Is Early Repayment?
Early repayment means paying off part (or all) of your mortgage before the scheduled time. This could be:
Paying more than the required monthly amount
Making a one-time lump sum payment
Paying off the full loan early (before the 15 or 30 years are up)
What Are Extra Payments?
Extra payments are any additional money you put toward your mortgage principal outside of your regular monthly payment.
There are two common ways to do this:
Monthly extra: Adding a fixed amount (like $100 or $200) to each payment.
Occasional lump sums: Applying a tax refund, bonus, or savings toward your principal once or twice a year.
Why It Matters: Principal vs Interest
Every time you make an extra payment, it goes straight to the principal — reducing the base loan amount. And because interest is charged on the remaining principal, this means:
You’ll pay less interest overall
You’ll shorten your loan term
You’ll build home equity faster
Real Example: The Power of One Extra Payment
Let’s say:
Loan: $300,000
Term: 30 years
Rate: 6%
By making just one extra $1,000 payment per year, you could:
Pay off the mortgage nearly 3 years earlier
Save over $20,000 in interest
Now imagine doing more than one!
FAQ: Frequesntly Asked Questions
What is a mortgage calculator?
How do I use the mortgage calculator?
What does a mortgage payment include?
Can I calculate the total interest I’ll pay over time?
What is PMI, and does the calculator include it?
Is this calculator accurate?