How Mortgage Amortization Works (and How Extra Payments Save Thousands)
See how each mortgage payment splits between interest and principal, why early payments are mostly interest, and how small overpayments shorten the loan.
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Mortgage Calculator
Estimate monthly mortgage payment, taxes, insurance, and compare shorter vs longer terms with a richer payoff view.
PITI = principal + interest + taxes + insurance. Use the sliders to test affordability quickly.
Estimated monthly housing cost$0Principal, interest, tax, and insurance combined
Principal & interest$0
Total interest$0
Down payment ratio0%
Loan amount$0
15-year$0
20-year$0
30-year$0
Affordability insights
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| Month | Payment | Principal | Interest | Balance |
|---|
Understanding your mortgage payment
This calculator splits a home purchase into the monthly figure you will actually pay: principal and interest on the loan, plus a monthly share of property tax and homeowners insurance. Lenders often call that total PITI (principal, interest, taxes and insurance), and it is the number that has to fit your budget.
Principal and interest are fixed for the life of a fixed-rate loan. Taxes and insurance can rise over time, so treat them as a minimum and check recent bills for the area you are buying in.
Worked example with the default values
A $450,000 home with a $90,000 down payment (20%) leaves a $360,000 loan. At 6.75% over 30 years:
- Principal and interest: $2,334.95 a month
- Property tax: $5,400 ÷ 12 = $450 a month
- Insurance: $1,800 ÷ 12 = $150 a month
- Total monthly housing cost: $2,934.95
Over 30 years you would pay about $480,600 in interest, more than the amount borrowed. The same loan over 15 years costs $3,185.67 a month in principal and interest, but total interest falls to about $213,400.
What moves the payment most
- Rate. On this loan, each 0.25 percentage point changes the payment by roughly $60 a month.
- Down payment. Putting down 30% ($135,000) instead of 20% cuts principal and interest to $2,043.08.
- Term. Shorter terms raise the payment but cut total interest dramatically.
- Mortgage insurance. With less than 20% down on a conventional loan, expect private mortgage insurance on top of the figure shown here.
Want the full explanation? Read our guide: How Mortgage Amortization Works (and How Extra Payments Save Thousands).
How to use the Mortgage Calculator
- Enter the home price or loan amount, interest rate, and mortgage term.
- Add taxes, insurance, and any recurring housing costs for a more realistic estimate.
- Compare a conservative scenario with your preferred scenario before applying with a lender.
Amortizing mortgage payment formula
Payment = P × r × (1 + r)^n ÷ ((1 + r)^n − 1)
- P: Mortgage principal
- r: Monthly mortgage rate
- n: Number of monthly payments
The page may also add taxes, insurance, or other housing costs on top of the base mortgage payment for a more realistic monthly estimate.
Quick planning notes for the Mortgage Calculator
Monthly payments, PITI estimate, and 15 vs 30 year comparison. Start with a realistic baseline, then change one input at a time to see how the result moves. That makes it easier to compare scenarios and spot the trade-offs that matter most.
Housing decision tips
- Test multiple down payment and term combinations instead of relying on a single monthly payment estimate.
- Remember that taxes, insurance, maintenance, and closing costs can materially change the real cost of ownership.
- Compare the result with refinancing, DTI, and buy-vs-rent tools when the decision affects long-term cash flow.
Keep in mind
These results are designed for educational planning. Real-world figures can change based on official rates, lender fees, tax treatment, insurance, and personal circumstances.
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Frequently asked questions
Does this include PMI or HOA fees?
No. Add private mortgage insurance if your down payment is under 20%, and any homeowners association dues, to get your full monthly cost.
How much house can I afford?
A common guide is to keep total housing costs below about 28% of gross monthly income and all debt payments below about 36%. Check your figures with the debt-to-income calculator.
Why is so much of my early payment interest?
Interest is charged on the outstanding balance, which is largest at the start. Each payment reduces the balance slightly, so the interest share falls and the principal share grows over time.
Is the rate the same as the APR?
No. The APR includes certain fees and points, so it is usually a little higher than the note rate. Use the note rate here to estimate the payment, and the APR to compare offers.
Guides on this topic
Plain-English explanations to help you read the result above.
Fixed vs Adjustable-Rate Mortgage: Which One Fits You?
How fixed and adjustable-rate mortgages work, what rate caps mean, and a simple way to decide based on how long you plan to keep the loan.
Read the guideWhen Does Refinancing Make Sense? The Break-Even Rule
Use the break-even point to judge a refinance: compare closing costs with monthly savings, watch the reset term, and avoid the common traps.
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