Mortgage Calculator
Calculate monthly payments, total interest, and amortization schedules for home loans. Supports Fixed-Rate, Principal Equal, and Graduated repayment types with LTV/DTI analysis.
Mortgage Calculator
Typically for borrowers under 40
Compare monthly payments and total interest across 3 repayment types.
Enter loan details to calculate
your monthly payment
- Loan Amount: Up to $100M
- Interest Rate: 1 decimal place
- Loan Term: 5-40 years
- Interest-Only: Up to 10 years
| Month | Payment | Principal | Interest | Balance |
|---|
Typical lending standards: LTV up to 97% (with PMI), 80% (without PMI)
DTI: Max 43% for qualified mortgages, 28/36 rule recommended
Actual mortgage terms vary by lender, credit score, and property type
What is a Mortgage Calculator?
Mortgage Calculator is a financial tool that accurately calculates monthly payments, total interest, and amortization schedules for home loans. It supports 3 repayment types (Fixed-Rate, Principal Equal, Graduated), interest-only periods, and prepayment simulations. Essential for prospective homebuyers planning their purchase and existing borrowers managing repayment strategies.
Who Should Use This
- Prospective Homebuyers – Calculate loan amounts and monthly payments before purchasing to plan your budget
- Borrowers Planning Repayment – Check monthly payments and total interest under current loan terms to develop repayment strategies
- Comparing Repayment Types – Compare total interest differences across Fixed-Rate, Principal Equal, and Graduated options to choose the best fit
- Prepayment Planners – Verify interest savings and term reduction effects when making extra payments with available funds
- LTV/DTI Checkers – Calculate loan limits based on lending standards to determine loan eligibility
Key Features
- 3 Repayment Types – Supports Fixed-Rate, Principal Equal, and Graduated repayment with monthly payment and total interest calculations for each
- Interest-Only Period – Set interest-only periods from 0-10 years and verify interest-only payment amounts
- Monthly Amortization Schedule – View detailed monthly principal, interest, and balance throughout the loan term
- Repayment Type Comparison – Compare total interest and monthly payments across all 3 repayment types at a glance
- Prepayment Simulation – Calculate interest savings for term reduction or payment reduction prepayment strategies
- Simple LTV/DTI Calculation – Enter home price, annual income, and other debts to check loan-to-value and debt-to-income ratios
- Result URL Sharing – Share calculation results via URL to review with family or financial advisors
How to Use
- Enter Loan Amount – Enter the loan amount or click quick buttons ($100K, $200K, $300K, $500K)
- Enter Interest Rate – Enter the annual interest rate (%) offered by the lender
- Select Loan Term – Choose loan term from 5 to 40 years
- Select Interest-Only Period – If needed, select interest-only period (None, 1, 2, 3, 5, or 10 years)
- Select Repayment Type – Choose from Fixed-Rate, Principal Equal, or Graduated
- View Results – Monthly payment, total interest, and total payment are calculated instantly upon input
- Use Additional Tabs – Perform additional analysis in Compare, Prepayment, and LTV/DTI tabs
Repayment Type Details
1. Fixed-Rate Mortgage
Fixed-rate mortgages have the same monthly payment (principal + interest) throughout the loan term. Interest portion is higher initially, with principal portion increasing over time.
- Pros: Same payment each month enables predictable financial planning
- Cons: Higher initial interest burden and more total interest than Principal Equal
- Best For: Borrowers with stable income who prefer consistent payment schedules
2. Principal Equal Repayment
Principal Equal repayment has the same principal amount plus declining interest each month. Monthly payment decreases gradually.
- Pros: Lowest total interest and fastest principal reduction
- Cons: Higher initial payment burden, difficult with limited income
- Best For: Borrowers with sufficient initial funds prioritizing interest savings
3. Graduated Payment Mortgage
Graduated payment mortgages start with lower payments that increase annually (typically 6%). Beneficial for young borrowers expecting income growth.
- Pros: Lower initial payment barrier makes homeownership more accessible
- Cons: Highest total interest and increasing annual payments create long-term burden
- Best For: Borrowers under 40 with certain future income growth
- Limitations: Typically restricted to borrowers under 40
4. Interest-Only Period
Interest-only periods defer principal repayment for a set period while paying only interest.
- Pros: Reduces initial cash flow burden, enabling home purchase without large down payment
- Cons: Principal doesn’t decrease during interest-only period, significantly increasing total interest
- Best For: Borrowers with limited initial funds but expected future income growth
Prepayment Guide
Prepayment means paying off part of the principal early with available funds. You can choose between two prepayment strategies.
1. Term Reduction
Maintain monthly payment amount while shortening loan term.
- Pros: Greatest interest savings effect
- Cons: Monthly payment burden remains unchanged
- Best For: Borrowers comfortable with current monthly payment wanting maximum interest savings
2. Payment Reduction
Maintain loan term while reducing monthly payment amount.
- Pros: Improves monthly cash flow
- Cons: Less interest savings than term reduction
- Best For: Borrowers wanting to reduce monthly payment burden or needing cash flow improvement
Prepayment Penalties
Most US mortgages do not charge prepayment penalties, but some loans may include them during the first 3-5 years. Check your loan agreement for prepayment penalty clauses before making extra payments.
LTV/DTI Guide
LTV (Loan-to-Value Ratio)
LTV is the loan amount as a percentage of home value.
- Formula: LTV = (Loan Amount ÷ Home Price) × 100
- Typical Standards: Up to 97% with PMI, 80% to avoid PMI
- Example: $400K home, 80% LTV → Max loan $320K
- PMI: Private Mortgage Insurance required when LTV exceeds 80%, typically 0.5-1% of loan amount annually
DTI (Debt-to-Income Ratio)
DTI is annual debt payments as a percentage of annual income.
- Formula: DTI = (Annual Debt Payments ÷ Annual Income) × 100
- Typical Standards: Max 43% for qualified mortgages, 28/36 rule recommended
- Example: $80K annual income, 43% DTI → Max $34,400 annual debt payments ($2,867/month)
- Included Items: All debts including mortgage, personal loans, credit cards, auto loans
- 28/36 Rule: Housing expenses max 28% of gross income, total debt max 36%
FHA vs. Conventional Loans
FHA loans typically allow higher DTI (up to 50%) and lower credit scores (580+) compared to conventional loans, but require mortgage insurance for the life of the loan unless 10%+ down payment.
Frequently Asked Questions
Which repayment type is most advantageous?
Principal Equal is most advantageous for total interest only. However, it has higher initial payment burden, so consider cash flow and income situation. Fixed-Rate is most common due to consistent monthly payments.
What are the pros and cons of interest-only periods?
Interest-only periods reduce initial burden by paying only interest. However, principal doesn’t decrease, significantly increasing total interest. For example, a $300K loan (4%, 30 years) with 3-year interest-only increases total interest by $30K+.
What is PMI and when is it required?
Private Mortgage Insurance (PMI) is required when down payment is less than 20% (LTV > 80%). PMI costs 0.5-1% of loan amount annually and can be removed once equity reaches 20%. Consider 20%+ down payment to avoid PMI.
What are LTV and DTI?
LTV (Loan-to-Value) is loan amount as percentage of home price. DTI (Debt-to-Income) is annual debt payments as percentage of annual income. Typical standards: LTV up to 97% (with PMI), 80% (without PMI), DTI max 43% for qualified mortgages. Actual loan limit determined by lower of the two standards.
Which is better for prepayment: term reduction or payment reduction?
Term reduction is better for interest savings. Choose payment reduction if monthly cash flow is important. For example, $50K prepayment on $300K loan (6%, 30 years) saves approximately $96K with term reduction vs. $84K with payment reduction.
How are mortgage interest rates determined?
Mortgage rates are determined by base rate (Treasury yields, Fed funds rate) + lender margin. Margin varies by credit score, property type, home price, LTV ratio, and loan term. As of 2024, typical rates range from 6-7% for 30-year fixed mortgages.
30-year vs. 15-year mortgage: which is better?
15-year mortgages have lower interest rates (typically 0.5-1% lower) and save significant interest but have higher monthly payments. 30-year mortgages offer lower monthly payments with flexibility. Choose 15-year if you can afford higher payments and prioritize interest savings, 30-year for lower monthly burden and financial flexibility.
Are there prepayment penalties?
Most US mortgages do not have prepayment penalties, but some loans include them during the first 3-5 years. Check your loan agreement for prepayment penalty clauses. FHA and VA loans never include prepayment penalties.
Mortgage Tips
- Compare Rates – Compare multiple lenders including banks, credit unions, and online lenders to find the lowest rate
- Fixed vs. ARM – Fixed-rate mortgages are better in rising rate environments, ARMs better in falling rate environments
- Minimize Interest-Only – Start principal repayment immediately when possible for total interest savings
- Plan Prepayments – Making extra payments whenever you have available funds significantly reduces total interest
- Manage Credit Score – Higher credit scores qualify for lower rates, so maintain good credit habits
- Consider 20% Down – 20%+ down payment eliminates PMI and often qualifies for better rates
- Review Refinancing – Consider refinancing to lower rates if rates have dropped significantly