Mortgage Calculator

The first step is subtraction: the amount you borrow is the price minus the down payment. On a $300,000 home with 20% down, you borrow $240,000. Everything after that is a loan calculation on that figure, not on the price.

The ratio between the two has a name lenders care about a great deal — the loan-to-value, or LTV. Borrowing $240,000 against a $300,000 property is 80% LTV. That number, more than almost anything else about you, determines which products you are offered and at what rate, because it measures how much of the lender's money is exposed if the property has to be sold.

80% is the threshold that matters most in practice. Below it, in the United States, private mortgage insurance is generally not required; above it, you pay a monthly premium that protects the lender rather than you, and which can often be removed once you have built enough equity. In the UK the same logic appears as LTV bands, with visibly better rates at 75%, 80% and 90%. In both cases a slightly larger deposit that crosses a band can be worth more than it costs.

The monthly payment itself then uses the standard amortization formula: P·r·(1+r)ⁿ ÷ ((1+r)ⁿ − 1), with r the monthly rate and n the number of payments. It is the same arithmetic as any other instalment loan.

A $300,000 home with $60,000 down, at 6% over 30 years:

Two figures deserve attention. The monthly payment of $1,438.92 is the one people shop on, because it is the one that has to fit alongside everything else you pay each month. The total interest of $278,011.65 is the one that decides what the house actually costs — more than the deposit you saved for, and more than the full price of a home in many markets.

It is also worth noticing what the deposit did. Putting down $60,000 rather than $30,000 does not just reduce the balance by thirty thousand; it moves you from 90% to 80% loan-to-value, which in most markets means a better rate on the whole loan and, in the US, no mortgage insurance. Run both and compare the totals rather than the monthly figures alone.

For the full month-by-month breakdown of how each payment splits between interest and principal, put the loan amount into the related loan calculator; it renders the complete 360-row schedule.

The figure above is principal and interest only. Your actual monthly outgoing will be higher, and the gap is not small — this is the single most common way people misjudge affordability.

In the United States, lenders typically collect property taxes and homeowner's insurance alongside the payment and hold them in escrow, paying the bills on your behalf. Depending on the state, that can add several hundred dollars a month, and property tax in particular varies enormously by county. If your down payment is under 20%, private mortgage insurance is added on top. A condominium or a managed development adds HOA fees, which the lender does not collect but you must still pay.

In the UK the structure differs — council tax and buildings insurance are paid separately rather than escrowed — but the principle is identical: the mortgage payment is not the cost of owning the property. Add maintenance to all of it, for which a common rule of thumb is one per cent of the property value a year.

There are also one-off costs the monthly figure hides entirely: arrangement or origination fees, valuation and survey, legal fees, and in the UK stamp duty, which on a mid-priced home can run to thousands. These are paid at purchase and are frequently the constraint that decides whether a deal is possible at all.

The practical way to use this calculator is therefore to treat its output as a floor. Work out the principal and interest here, then add your local taxes, insurance and any mortgage insurance before deciding what you can afford.

Changing the term is the biggest lever on total cost, and it works in the opposite direction to the monthly payment. That same $240,000 at 6% over fifteen years costs $2,025.26 a month rather than $1,438.92 — but total interest falls from $278,011.65 to $124,546.15. Paying $586 more each month saves $153,465 over the loan.

This is the real trade-off behind the popularity of the thirty-year term: it buys a lower monthly payment with a much larger total cost. Neither choice is wrong, but the comparison should be made deliberately rather than by default, and it is worth running both here before deciding.

The rate matters most on long terms, because there is more time for the difference to compound. On a thirty-year loan, a single percentage point typically changes the monthly payment by roughly a tenth and the total interest by far more — which is why shopping more than one lender is usually worth more per hour than any other part of the process.

The down payment does two things at once: it reduces the amount borrowed, and it lowers the LTV. The second effect is often larger than the first, because crossing a band can unlock a better rate on the entire balance and remove mortgage insurance altogether. Try several deposit figures here and watch both the payment and the LTV, rather than optimising the payment alone.

These are estimates for comparing scenarios, not a quote, and this is general information rather than financial advice. Confirm the exact figures with a lender or broker before committing.