Mortgage Calculator: Estimate a Monthly Payment — Practical Guide

Find the amount actually borrowed

Subtract the down payment from the purchase price, then add any financed costs that belong in the loan. Do not enter the home price as the principal if you are borrowing less than the full amount. Convert the annual interest rate to a monthly rate by dividing by 12, and convert a 30-year term to 360 monthly payments. Check whether the quoted rate is fixed or adjustable and whether points or other fees are included.

Calculate principal and interest

For a fixed-rate loan, the monthly payment formula is M = P × i(1+i)^n / ((1+i)^n − 1), where P is principal, i is the monthly interest rate, and n is the total number of payments. At a zero interest rate, divide principal by the number of payments instead. A mortgage calculator applies this formula and can show a schedule, but the result does not include every cost of owning a home.

Build a complete monthly budget

Add estimated property taxes, homeowners insurance, mortgage insurance when required, and association fees to principal and interest. Taxes and premiums can change over time. Maintenance, utilities, and closing costs are also separate from the loan payment. Compare a monthly estimate with your emergency savings and other debt obligations. A lender’s official loan estimate provides standardized cost disclosures; use it to confirm fees and payment timing rather than relying only on a web calculator.

Worked example

Loan: $320,000
Fixed annual rate: 6.5%
Term: 30 years = 360 payments
Estimated principal + interest: about $2,023/month
Add taxes, insurance, and fees separately

Does a mortgage calculator include property tax?

Only if you enter it. The basic mortgage formula covers principal and interest; taxes, insurance, and other housing costs should be added separately.

Reference and further reading

Read the official documentation ↗