Smart Mortgage Calculator

Calculate payments, compare strategies, save on interest

Loan Information

Extra amount paid towards principal each month

Optimization Strategy

Use original repayment plan

How to Use Our Mortgage Calculator

Getting Started with Your Mortgage Calculation

Our mortgage calculator helps you understand your monthly payments and total costs over the life of your loan. Simply enter your loan details to see a complete breakdown of principal, interest, and optimization opportunities.

Step 1: Enter Loan Details

  • Input your current loan balance or home purchase price
  • Add your interest rate (APR)
  • Select your loan term in years and months

Step 2: Explore Optimization

  • Try different prepayment strategies
  • Compare shorter loan terms
  • See potential interest savings

Understanding Your Mortgage Payment

Your monthly mortgage payment typically consists of four components, often referred to as PITI:

P
Principal

Amount that reduces your loan balance

I
Interest

Cost of borrowing the money

T
Taxes

Property taxes (not included in this calculator)

I
Insurance

Homeowners and PMI (not included)

Note: This calculator shows principal and interest only. Add 20-40% for taxes and insurance estimates.

Common Mortgage Scenarios & Examples

First-Time Homebuyer

Scenario: $400,000 home, 10% down

Loan Amount: $360,000

Interest Rate: 7.0% (30-year fixed)

Monthly Payment: ~$2,395 (P&I only)

💡 Tip: Consider putting 20% down to avoid PMI

Refinancing to Lower Rate

Current: $300,000 @ 8.5%

New Rate: 6.5%

Monthly Savings: ~$432

Lifetime Savings: ~$155,000

💡 Tip: Calculate break-even with closing costs

15 vs 30 Year Mortgage

Loan: $500,000 @ 7.0%

30-Year: $3,327/month, $698k interest

15-Year: $4,494/month, $309k interest

Interest Saved: $389,000

💡 Tip: 15-year saves huge on interest

Extra Payment Strategy

Loan: $400,000 @ 7.5%

Extra: $500/month

Time Saved: 11 years 3 months

Interest Saved: $276,000

💡 Tip: Even $100 extra makes a difference

Smart Mortgage Strategies to Save Money

Ways to Reduce Interest Costs

  • 1.
    Make Bi-Weekly Payments: Split your monthly payment in half and pay every two weeks. This results in 13 full payments per year instead of 12.
  • 2.
    Round Up Payments: Round your payment up to the nearest $100. A $2,397 payment rounded to $2,500 can save years of interest.
  • 3.
    Annual Lump Sum: Use tax refunds or bonuses for one extra payment per year directly to principal.
  • 4.
    Refinance Strategically: When rates drop 0.75% or more, calculate if refinancing saves money after closing costs.

Common Mortgage Mistakes to Avoid

  • ✗
    Not Shopping Rates: A 0.5% difference on a $400k loan costs $50,000+ over 30 years.
  • ✗
    Ignoring Total Cost: Don't just look at monthly payments. Consider total interest paid.
  • ✗
    Forgetting Closing Costs: Factor in 2-5% of loan amount for closing costs and fees.
  • ✗
    No Emergency Fund: Keep 3-6 months of payments saved before buying.

Mortgage Terms Explained

APR (Annual Percentage Rate)

The yearly cost of your loan including interest and fees, expressed as a percentage.

Amortization

The process of paying off debt through regular payments of principal and interest.

Principal

The amount of money borrowed, excluding interest and other charges.

PMI (Private Mortgage Insurance)

Insurance required when down payment is less than 20% of home value.

LTV (Loan-to-Value)

The ratio of your loan amount to the home's value, expressed as a percentage.

Points

Fees paid to lower your interest rate. One point equals 1% of loan amount.

Escrow

Account held by lender to pay property taxes and insurance on your behalf.

Fixed-Rate Mortgage

A loan with an interest rate that remains constant for the entire term.

ARM (Adjustable-Rate)

A mortgage with an interest rate that changes periodically based on market conditions.

Frequently Asked Questions

How much house can I afford?
A general rule is that your monthly mortgage payment shouldn't exceed 28% of your gross monthly income. Your total debt payments (including mortgage) should stay below 36% of gross income. Use our calculator to see what monthly payment fits your budget, then work backward to find your price range.
What's the difference between interest rate and APR?
The interest rate is the cost of borrowing the principal loan amount. APR (Annual Percentage Rate) includes the interest rate plus other costs like mortgage insurance, closing costs, discount points, and loan origination fees. APR gives you a better idea of the true cost of your loan.
Should I pay points to lower my rate?
Paying points (1 point = 1% of loan amount) can lower your interest rate by about 0.25%. It makes sense if you plan to stay in the home long enough for the monthly savings to exceed the upfront cost. Calculate your break-even point: divide the cost of points by your monthly savings.
How much should I put down?
While 20% down helps you avoid PMI (Private Mortgage Insurance), many loans allow as little as 3-5% down. FHA loans require 3.5%, VA and USDA loans may require 0% down. Consider your savings, monthly budget, and how PMI affects your payment when deciding.
When should I refinance my mortgage?
Consider refinancing when: rates drop 0.75% or more below your current rate, you want to switch from ARM to fixed-rate, you need to tap home equity, or you want to shorten your loan term. Calculate if you'll stay in the home long enough to recoup closing costs through monthly savings.
Is a 15-year or 30-year mortgage better?
A 15-year mortgage has higher monthly payments but saves hundreds of thousands in interest and builds equity faster. A 30-year mortgage has lower payments, providing more cash flow flexibility. Choose based on your budget, financial goals, and whether you can afford the higher 15-year payment comfortably.
How do extra payments help?
Extra payments go directly to principal, reducing the amount on which interest is calculated. Even $100 extra per month on a $400,000 loan can save over $100,000 in interest and cut years off your loan. Use our calculator's optimization features to see your potential savings.
What credit score do I need for a mortgage?
Conventional loans typically require 620+, FHA loans accept scores as low as 580 (or 500 with 10% down), VA loans have no minimum but lenders usually want 620+, and USDA loans typically require 640+. Higher scores (740+) get the best rates. Every 20-point increase can lower your rate.

Ready to Save on Your Mortgage?

Use our calculator to explore different scenarios and find the strategy that saves you the most money. Every dollar counts when it comes to your largest investment.