Mortgage Calculator Fixed-Rate
Amortization Schedule
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Mortgage Calculation Guide
What is a Mortgage?
A mortgage is a loan specifically designed for purchasing a home or other real estate. The property itself serves as collateral for the loan. Buying a home is likely the biggest purchase of your life, and our free Mortgage Calculator helps you estimate your total monthly payment for 2025 and beyond.
By factoring in property taxes, homeowners insurance, and PMI, you get a realistic picture of your true housing costs. (Note: This tool is optimized for US fixed-rate loans.) Use this tool to compare different loan scenarios, see how a larger down payment affects your wallet, and plan for a financially secure future. While primarily designed for US fixed-rate mortgages, the math works for any standard amortizing loan.
The Math Behind Your Mortgage
Curious about the numbers? Lenders use a standard amortization formula to determine your fixed monthly payment ($M$). It balances your principal ($P$), monthly interest rate ($r$), and the total number of months in your loan ($n$).
What is PITI?
Lenders use the acronym PITI to describe the four main components of your monthly mortgage bill:
- Principal: The money that goes directly toward paying down your loan balance.
- Interest: The fee the lender charges you for borrowing the money. In the beginning, this makes up most of your payment.
- Taxes: Property taxes levied by your local government to fund schools and services. Lenders often collect this monthly.
- Insurance: Homeowners insurance protects your home from damage. If you put less than 20% down, this may also include PMI (Private Mortgage Insurance).
The Amortization Schedule
Your amortization schedule shows the journey to being debt-free. In the early years, most of your money goes toward interest. Over time, the scales tip, and you start paying off the house (principal) faster.
Use the "View Schedule" button above to see exactly when you'll cross the break-even point.
Smart Strategies
- Avoid PMI: A down payment of 20% or more typically removes the need for private mortgage insurance.
- 15 vs. 30 Year: A 30-year term offers lower monthly bills, while a 15-year term saves massive amounts on total interest.
- Extra Payments: Even adding $50/month to your principal can shave years off your loan term.
Costs of Ownership
Budget for these often-overlooked expenses:
Lower Your Payment
Proven strategies to reduce monthly costs:
Common Mortgage Terms Explained
The ratio of your loan amount to the home's value. Lenders use this to determine risk. Tip: keeping LTV under 80% usually avoids PMI.
The percentage of your gross monthly income that goes to paying debts. Most lenders prefer a DTI under 36%.
A savings account managed by your lender. A portion of your monthly payment goes here to pay your property taxes and insurance when they are due.
Fixed: Rate stays the same forever.
Adjustable (ARM): Rate changes after a set period based on market conditions.
Frequently Asked Questions
Do I really need a 20% down payment?
No. While 20% avoids Private Mortgage Insurance (PMI), many lenders accept as little as 3% - 3.5% for conventional or FHA loans. However, a lower down payment usually means a higher monthly payment.
What is included in my monthly payment?
Your total payment typically includes Principal and Interest (the loan itself), plus Escrow items like Property Taxes and Homeowners Insurance. If your down payment is under 20%, it may also include PMI.
How can I pay off my mortgage faster?
Making extra payments toward your principal balance reduces total interest. Even one extra payment per year can shave years off a 30-year term. Use the "More Options" section above to test this strategy.
What is a "good" interest rate?
Rates fluctuate daily based on the economy and your credit score. Generally, a score above 740 secures the lowest rates. Compare quotes from at least 3 lenders to ensure you aren't overpaying.
Should I choose a 15-year or 30-year term?
A 30-year loan offers lower monthly payments, making it easier to qualify. A 15-year loan has higher monthly payments but saves you tens of thousands of dollars in interest over the life of the loan.
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Mortgage Readiness Checklist
Have these ready before you apply:
- Proof of Income: Recent pay stubs & W-2s (last 2 years).
- Credit Report: Check for errors. Score > 620 is ideal.
- Asset Statements: 60 days of bank statements for down payment.
- Debt List: Student loans, auto loans, and credit cards.
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