How to work out a mortgage payment
- Enter the Home price and your Down payment, as a percentage of the price or as an amount.
- Enter the Interest rate and the Term in years: tap 15, 20, 25 or 30, or type any other length.
- Optionally add yearly Property tax and Home insurance, monthly HOA fees and PMI, and an Extra payment to see how much sooner you’d be done. The schedule shows each year or each month’s principal, interest and balance.
How the term changes the cost
The same 280,000 loan (a 350,000 home with 20% down) at 6.5%:
| Term | Monthly payment | Total interest |
|---|---|---|
| 30 years | 1,769.79 | 357,124.57 |
| 25 years | 1,890.58 | 287,174.02 |
| 20 years | 2,087.60 | 221,025.15 |
| 15 years | 2,439.10 | 159,038.11 |
| 10 years | 3,179.34 | 101,521.20 |
On the 30-year loan you pay back more in interest than you borrowed. The 15-year loan costs about 670 more a month but saves nearly 200,000 over the life of the loan. Everything here uses the same rate, so try your lender’s actual rate for each term.
Reading the schedule
Early in a long mortgage, most of each payment is interest. In the 30-year example above, the interest paid each year is larger than the principal paid for the first 19 years. Only in year 20 does the balance start falling faster than interest builds up. This is why extra payments early on save so much, and why your balance seems to barely move in the first few years.
Lenders often collect property tax and insurance with the monthly payment and pay those bills for you from an escrow account. Tax and insurance amounts can change from year to year, so treat those figures as estimates. HOA fees and PMI are included only when you enter them, and closing costs aren’t included.