Mortgage Payment Calculator
Enter your loan details below for a complete payment breakdown
How Is a Mortgage Payment Calculated?
Your monthly mortgage payment is made up of several components — understanding each one helps you make smarter decisions when shopping for a home. The core calculation uses a standard amortization formula that factors in your loan amount, interest rate, and loan term.
Where:
M = Monthly payment
P = Principal loan amount (home price minus down payment)
r = Monthly interest rate (annual rate ÷ 12)
n = Total number of payments (loan term in years × 12)
Beyond the principal and interest, your total monthly payment typically includes four components — often called PITI:
| Component | What It Is | Typical Amount |
|---|---|---|
| Principal | Reduces your loan balance | Varies by loan stage |
| Interest | Cost of borrowing money | Highest in early years |
| Property Tax | Annual tax ÷ 12 | $200–$600/month |
| Insurance | Homeowner's insurance | $100–$250/month |
| PMI | If down payment under 20% | $50–$200/month |
Why 20% Down Payment Matters
The 20% down payment threshold is one of the most important numbers in home buying. When your down payment reaches 20% of the home's purchase price, two significant things happen:
You Avoid Private Mortgage Insurance (PMI)
PMI is an extra monthly charge that protects the lender — not you — if you default on the loan. It typically costs 0.5% to 1% of your loan amount per year. On a $400,000 home with 10% down, that's roughly $150–$300 per month in extra costs that build zero equity.
You Start With More Equity
A larger down payment means a smaller loan, lower monthly payments, and less total interest paid over the life of the loan. On a $400,000 home at 7.1% for 30 years, the difference between 10% and 20% down saves you over $40,000 in total interest.
15-Year vs 30-Year Mortgage: Which Is Right for You?
This is one of the most debated decisions in home financing. Both options have real advantages depending on your financial situation and goals.
| Factor | 15-Year Mortgage | 30-Year Mortgage |
|---|---|---|
| Monthly Payment | Higher (~40% more) | Lower and more flexible |
| Total Interest Paid | Much less (often 50% less) | Significantly more |
| Interest Rate | Typically 0.5–0.75% lower | Higher rate |
| Equity Building | Much faster | Slower in early years |
| Cash Flow Flexibility | Less monthly flexibility | More monthly breathing room |
| Best For | High income, close to retirement | First-time buyers, tighter budgets |
How to Interpret Your Mortgage Calculator Results
Getting a number from a mortgage calculator is just the first step. Here's how to use those results to make a smart decision:
The 28% Rule
Financial experts and lenders recommend that your total housing payment — including principal, interest, taxes, and insurance — should not exceed 28% of your gross monthly income. If your household earns $7,000/month, your maximum housing payment should be around $1,960.
The 36% Rule
Your total debt payments — housing plus car loans, student loans, credit cards — should stay under 36% of gross income. This is called the debt-to-income ratio and lenders use it to qualify you for a mortgage.
The Buffer Rule
Whatever the calculator says you can afford — budget for 10-15% less. Homes always come with unexpected costs: maintenance, repairs, HOA increases, property tax reassessments. The most financially stable homeowners live comfortably below their maximum approval amount.
Your Financial Data Stays 100% Private
Every calculation on LedgerCalc happens entirely within your browser. Your home price, income, down payment, and loan details are never sent to our servers, never stored in any database, and never shared with any third party — including advertisers. This is a fundamental design choice, not just a policy. The math runs locally on your device and disappears when you close the tab. No account required. No email needed. No data collected.