How mortgage calculator works
A mortgage is a loan used to buy a home, repaid in equal monthly installments over a fixed term. Each payment covers part of the principal (the amount borrowed) plus interest. Early in the loan most of each payment is interest; later, most goes to principal. The standard amortization formula turns the loan amount, monthly rate, and number of payments into a fixed monthly payment.
This calculator uses the standard fixed-rate amortization formula: M = P × r × (1+r)^n / ((1+r)^n − 1), where P is the loan amount (home price minus down payment), r is the monthly interest rate (annual rate ÷ 12 ÷ 100), and n is the number of months (years × 12). At 0% interest it falls back to loan ÷ months. It reports the monthly payment, total amount paid over the term, and total interest.
Enter the home price, down payment, annual interest rate as a percentage, and the loan term in years. The down payment reduces the amount you borrow and so lowers every payment. The result is a fixed-rate estimate — adjustable-rate mortgages and taxes or insurance are not included. For a full picture of housing cost, add property tax and insurance yourself.