Calculate your monthly mortgage payment and see how extra payments can save tens of thousands in interest and pay off your home loan years early.
Start CalculatingA mortgage is typically the largest financial commitment you'll make in your lifetime. Understanding how mortgage payments work and the power of extra payments can save you tens of thousands of dollars and years of payments.
Your monthly mortgage payment consists of several components:
Our calculator focuses on the principal and interest portion, which is the core of your mortgage payment.
Mortgage payments are structured so that you pay more interest at the beginning and more principal toward the end. This is called amortization. In the early years of a 30-year mortgage:
Your total monthly mortgage payment typically includes four components:
This calculator focuses on P&I, which is the core loan repayment. Early in your mortgage, about 80% goes to interest. By year 15-20, this flips, with most going to principal.
Usually 1-3% of home value annually, paid monthly through escrow. Taxes can increase over time, affecting your payment. Some areas offer homestead exemptions that reduce tax burden.
Homeowners insurance protects your investment. Costs vary by location, home value, and coverage. Shop annually as rates can change significantly between providers.
Required if down payment is less than 20%. Typically costs 0.3-1.5% of loan amount annually. Can be removed once you reach 20% equity through payments or home appreciation.
Recasting: Pay large lump sum toward principal, lender recalculates payments (same rate/term, lower payment). Usually costs $150-300.
Refinancing: New loan replaces old one, potentially new rate/term. Costs 2-6% of loan amount but may provide significant savings.
PMI can be removed when you reach 20% equity. Monitor home values and consider ordering an appraisal if your area has appreciated. This can eliminate $100-400+ monthly.
Mortgage interest is deductible up to $750,000 in loan amount (married filing jointly). Standard deduction changes in 2018 mean fewer people itemize, affecting the value of this deduction.
Sometimes it makes more financial sense to invest extra money rather than pay down your mortgage:
Understanding how your payments change over time helps you see the value of extra payments:
Instead of making the same extra payment each month, increase it by a small amount annually. Start with $100 extra, then $110, then $120, etc.
Make extra payments during certain months when you typically have more income or lower expenses.
Automatically apply your annual tax refund to mortgage principal. This creates a forced savings/payment plan.
Understanding current market conditions helps you make informed decisions:
Use our free mortgage calculator above to:
Start planning your home purchase today. Our calculator provides accurate estimates to help you make informed decisions about one of the biggest financial commitments of your life.