Mortgage Calculator Guide: Formula & Worked Example
Short answer
Monthly home payment including property tax and insurance. In the fixed example below, total monthly payment is 2,547.62. Your answer depends on the inputs and assumptions you choose.
Formula
Result = Mortgage Calculator calculation using home price, down payment, interest rate, loan term, property tax, home insurance
The inputs are home price, down payment, interest rate, loan term, property tax, home insurance. Use the input scale shown beside each field and keep time periods and units consistent. Only round the final result for display.
Worked example
- Home price
- 400000
- Down payment
- 20
- Interest rate
- 6.5
- Loan term
- 30
- Property tax
- 1.2
- Home insurance
- 1500
- Total monthly payment: 2,547.62
- Principal & interest: 2,022.62
- Property tax / month: 400.00
- Insurance / month: 125.00
- Loan amount: 320,000.00
- Total interest: 408,142.36
Understanding the result
Monthly home payment including property tax and insurance. Start with the base example, then replace each value with the figure that matches your situation.
Home price
The example uses 400000 for home price. This is an illustration, not a recommended value. Keep the unit and time period shown by the field.
Down payment
The example uses 20 % for down payment. This is an illustration, not a recommended value. Keep the unit and time period shown by the field.
Interest rate
The example uses 6.5 % / yr for interest rate. This is an illustration, not a recommended value. Keep the unit and time period shown by the field.
Loan term
The example uses 30 years for loan term. This is an illustration, not a recommended value. Keep the unit and time period shown by the field.
Property tax
The example uses 1.2 % / yr for property tax. This is an illustration, not a recommended value. Keep the unit and time period shown by the field.
Home insurance
The example uses 1500 / yr for home insurance. This is an illustration, not a recommended value. Keep the unit and time period shown by the field.
What the comparison means
The comparison changes only home price, keeping every other example input fixed. This isolates that input's effect on the primary result. It does not predict future outcomes.
Rates, fees, eligibility, local tax rules and provider rounding can change the final amount. Reference tax and exchange-rate data may be outdated; verify the official source before deciding.
What goes into a real mortgage payment (PITI)
- Principal and interest – the part this calculator's amortization formula produces.
- Property taxes – usually collected monthly into an escrow account.
- Homeowners insurance – also commonly paid through escrow.
- PMI – private mortgage insurance, typically required on conventional loans with less than 20% down.
- HOA dues – paid separately if the home is in an association.
Lenders look at the full PITI amount, not just principal and interest, when deciding what you can borrow.
15-year vs 30-year mortgage
| 300,000 loan at 6.5% | 30-year | 15-year | |---|---|---| | Monthly principal & interest | about 1,896 | about 2,613 | | Total interest paid | about 382,600 | about 170,400 |
The 15-year loan costs about 717 more per month but saves over 200,000 in interest, and 15-year rates are usually lower than 30-year rates, which widens the gap further.
People also ask
How much house can I afford?
A common rule of thumb is the 28/36 rule: housing costs under 28% of gross monthly income and total debt payments under 36%. Your lender's limits and your own budget matter more than any rule.
How much should I put down?
20% down avoids PMI on a conventional loan, but many buyers put down less. FHA loans allow 3.5% down with mortgage insurance. Keep enough cash for closing costs (often 2–5% of the price) and an emergency fund.
Do extra payments really help?
Yes. One extra payment per year on a 30-year loan typically cuts several years off the term. Ask your servicer to apply extra money to principal.
Where can I compare official mortgage information?
The Consumer Financial Protection Bureau's “Owning a Home” resources explain Loan Estimates, closing costs and rate shopping.
Comparison
| Scenario | Input | Result |
|---|---|---|
| Lower input | Home price: 320000 | Total monthly payment: 2,063.09 |
| Base example | Home price: 400000 | Total monthly payment: 2,547.62 |
| Higher input | Home price: 480000 | Total monthly payment: 3,032.14 |
Common mistakes
- Using the wrong units for home price.
- Comparing results while changing more than one input at a time.
- Rates, fees, eligibility, local tax rules and provider rounding can change the final amount. Reference tax and exchange-rate data may be outdated; verify the official source before deciding.
Checklist
- Confirm home price.
- Confirm down payment is expressed in %.
- Confirm interest rate is expressed in % / yr.
- Confirm loan term is expressed in years.
- Confirm property tax is expressed in % / yr.
- Check the result against your source or provider.
Calculators Percentage Editorial Team
Calculator guides from the Calculators Percentage team. These introductory examples are educational, not professional advice.
Last reviewed:
Rates, fees, eligibility, local tax rules and provider rounding can change the final amount. Reference tax and exchange-rate data may be outdated; verify the official source before deciding.