How this mortgage calculator works
A fixed-rate mortgage is repaid with the same payment every month until the balance reaches zero. That single payment is split two ways: part covers the interest charged on the outstanding balance that month, and whatever is left chips away at the principal you borrowed.
Because the balance is largest at the start, the interest slice is largest at the start too — so in the early years most of your money goes to the lender as interest and only a little reduces what you owe. As the balance shrinks, the interest portion shrinks with it and the principal portion grows, which is why a loan pays off slowly at first and then accelerates.
What the results tell you
The headline figure is your monthly principal-and-interest payment. The total interest shows the lifetime cost of borrowing on top of the amount you took out, and the total of payments is principal plus interest combined.
The donut chart compares how much of your total outlay is the original loan versus pure interest, and the balance chart traces the loan falling toward zero across the term. The yearly table breaks the same story into annual rows.
Ways to pay less interest
Interest is charged on the balance, so anything that lowers the balance faster saves money. A few common levers:
- Choose a shorter term — a 15-year loan carries a higher payment but a far smaller interest bill than a 30-year one.
- Make extra principal payments; even one additional payment a year can shave years off the schedule.
- Put down a larger deposit so you borrow less in the first place.
- Refinance if rates fall meaningfully and you will keep the loan long enough to recoup the closing costs.
What this estimate leaves out
This tool models principal and interest only. A real monthly housing cost usually also includes property taxes, homeowners insurance, private mortgage insurance (PMI) when the down payment is under 20%, and any HOA dues. Budget for those separately on top of the figure shown here.
Formula
r = annualRate/100/12; n = years×12; payment = P·r·(1+r)ⁿ / ((1+r)ⁿ − 1)Frequently asked questions
- Does this include taxes and insurance?
- No. The result is principal and interest only. Property tax, homeowners insurance, PMI and HOA fees are additional and vary by location and lender.
- Why is so much of my early payment interest?
- Interest each month is the balance times the monthly rate. At the start the balance is near its peak, so the interest charge is large and little is left to reduce principal. The mix flips as the balance falls.
- How much does a shorter term save?
- A lot. Halving the term roughly doubles the monthly payment but can cut total interest by more than half, because the balance is paid down far more quickly.