How to Use This Mortgage Calculator
This calculator gives you the full picture of what buying a home actually costs each month — not just the principal and interest, but property taxes, homeowner’s insurance, HOA fees, and PMI if your down payment is below 20%. Most calculators show you only part of the number. This one shows you the real number.
Here is exactly how to use each field:
Home Price is the purchase price you and the seller agree on, not the loan amount. If you are buying a $400,000 home with $80,000 down, your home price is $400,000 and your loan amount is $320,000. Start here.
Down Payment is the upfront cash you bring to closing. Enter it as a percentage and the calculator converts it to a dollar amount automatically. Go below 20% and PMI activates — the calculator adds it to your monthly payment and shows you exactly what it costs. The minimum is 3% for most conventional loans, 3.5% for FHA, and 0% for VA and USDA loans.
Interest Rate is the annual rate your lender charges on the loan balance. If you select a loan type from the tabs above, the calculator pre-fills today’s real Freddie Mac average for that loan type. For Custom, type in the exact rate your lender quoted — even a 0.25% difference on a 30-year $400,000 loan is over $20,000 in total interest.
Loan Term is how many years you take to repay. The most common choices are 30 years and 15 years. A longer term lowers your monthly payment but dramatically increases total interest paid. The difference between a 30-year and 15-year mortgage on a $320,000 loan at current rates is over $150,000 in total interest.
Property Tax, Home Insurance, and HOA are optional fields but entering them gives you your true monthly housing cost — which is what lenders actually use to qualify you, and what you will actually pay each month.
What Is a Mortgage Payment Made Of?
Your monthly mortgage payment is not a single number. It is made up of several components, and understanding each one helps you know where your money goes and which parts you can control.
Principal
Principal is the portion of your payment that reduces what you owe. In the early years of a 30-year mortgage, very little of your payment goes toward principal. On a $320,000 loan at 6.25%, your first monthly payment of $1,971 sends only about $308 toward the balance — the rest is interest. By year 15, that split reverses. This is called amortization, and the schedule tab in the calculator shows you exactly how it works year by year.
Interest
Interest is what the bank charges for lending you money. It is calculated monthly on your remaining balance. Since your balance is highest at the start, interest charges are highest at the start. Over a 30-year loan at 6.25%, you pay roughly 55 cents in interest for every dollar you borrow. This is why the loan comparison tab matters — even a small rate difference compounds enormously over 30 years.
Private Mortgage Insurance (PMI)
PMI protects the lender, not you. It is required when your down payment is below 20% of the home’s purchase price. The typical cost is 0.5% to 1.5% of the loan amount per year — on a $320,000 loan, that is $133 to $400 per month added to your payment. PMI is not permanent. Once your loan balance drops to 80% of the original home value through your regular payments or home appreciation, you can request its removal. The good news: the calculator shows you exactly what PMI adds to your monthly cost so there are no surprises at closing.
Property Tax
Property taxes are collected by your local county or municipality and are based on your home’s assessed value. The national average is roughly 1.1% of home value per year, but this varies wildly by state. New Jersey homeowners pay over 2% annually. Hawaii homeowners pay less than 0.3%. In absolute terms, a $400,000 home in New Jersey costs over $8,000 per year in taxes — about $667 per month. The same home in Alabama costs under $2,000 per year. Your local county assessor’s website will give you the exact rate for any specific property.
Lenders collect property taxes monthly through an escrow account and pay them on your behalf when they come due. This means your actual monthly payment to the lender includes your principal, interest, and a tax reserve — which is why the calculator’s full payment figure matters more than just the P&I number.
Homeowner’s Insurance
Lenders require homeowner’s insurance on any mortgaged property. The national average is around $1,800 to $2,200 per year for a $400,000 home, but premiums vary significantly by state. Florida, Texas, Louisiana, and other coastal states with hurricane exposure have seen dramatic premium increases in recent years — some homeowners in South Florida are paying $8,000 to $15,000 per year, which adds $650 to $1,250 per month to housing costs. If you are buying in a high-risk state, get an insurance quote before running your mortgage numbers.
HOA Fees
If you are buying a condo, townhouse, or a home in a planned community, you will likely owe HOA fees on top of your mortgage. HOA fees range from under $100 per month for basic communities to over $1,000 per month for luxury condos with doormen, pools, and amenities. HOA fees are not included in your mortgage payment — you pay them separately — but lenders do count them against your debt-to-income ratio when qualifying you for a loan.
Current Mortgage Rates in 2026: What You Need to Know
Mortgage rates in 2026 have stabilized after one of the most volatile periods in modern history. Here is where things stand and why.
Why Rates Are Where They Are
The Federal Reserve held its benchmark interest rate at 3.50% to 3.75% at its most recent FOMC meeting in March 2026, following a series of cautious cuts from the 5.25% to 5.50% peak reached in mid-2023. Mortgage rates do not move in lockstep with the Fed rate — they track the 10-year Treasury yield more closely — but the Fed’s overall direction matters for where mortgage rates are heading.
As of the week of March 24, 2026, the Freddie Mac Primary Mortgage Market Survey (PMMS) shows the 30-year fixed rate at 6.22% to 6.37% for well-qualified borrowers. The 15-year fixed is at 5.54% to 5.87%. These rates are considerably higher than the pandemic-era lows of 2.65% to 3.00% seen in 2021, but they are meaningfully below the 7.79% peak reached in October 2023.
How Your Credit Score Affects Your Rate
The rates above are averages for borrowers with 780+ FICO scores, 20% down payment, and strong income verification. Your actual rate depends heavily on your credit profile.
A borrower with a 760+ FICO score on a $400,000 purchase with 20% down might receive a 6.25% rate. The same loan for a borrower with a 680 FICO score might come in at 6.90% to 7.25% — adding $130 to $200 per month and over $50,000 in total interest over 30 years. Before applying for a mortgage, check your credit report, dispute any errors, and pay down revolving balances to improve your score.
Rate Lock Strategy in 2026
Once you have a purchase agreement, your lender will offer you a rate lock — typically for 30, 45, or 60 days. Locking in protects you if rates rise before closing. If you are buying in 2026, most economists and rate forecasters expect rates to drift lower gradually as the Fed continues its easing cycle, but predicting short-term rate moves is notoriously unreliable. The cost of waiting for a slightly better rate rarely outweighs the certainty of locking in a rate you can afford today.
The 6 Major Loan Types Compared: Which One Is Right for You?
30-Year Fixed Mortgage
Current rate: 6.22%–6.37% | Best for: Most buyers
The 30-year fixed is the most common mortgage in the United States for a reason. It offers the lowest monthly payment of any fixed-rate loan, predictable payments for three decades, and enough flexibility in your monthly budget to save, invest, and handle life’s surprises.
On a $320,000 loan at 6.25%, your monthly principal and interest payment is $1,971. Total interest over 30 years is $389,560. That is the real cost of the convenience and stability. If you plan to stay in the home for many years and value payment certainty, the 30-year fixed is the right choice for most buyers.
The main argument against it is the total interest cost. If you can afford a 15-year mortgage, the interest savings are substantial. But for most buyers, the 30-year provides the breathing room that makes homeownership sustainable.
15-Year Fixed Mortgage
Current rate: 5.54%–5.87% | Best for: Buyers who want to minimize interest
The 15-year fixed has two advantages over the 30-year: a lower interest rate and a shorter repayment period, both of which dramatically reduce total interest paid. On that same $320,000 loan at 5.70%, your monthly P&I payment is $2,657 — $686 more per month than the 30-year. However, your total interest paid drops from $389,560 to roughly $157,860 — a savings of over $230,000.
The 15-year also builds equity much faster. By year 5, you have paid off nearly $60,000 of principal on a 15-year loan versus only about $19,000 on a 30-year. This matters if you plan to sell or tap home equity later.
The right question to ask is: can I comfortably afford the higher monthly payment while still contributing to retirement accounts, maintaining an emergency fund, and handling unexpected expenses? If yes, the 15-year is one of the best financial decisions available to a homeowner.
FHA Loan
Current rate: ~6.06% | Best for: First-time buyers with lower credit or smaller down payments
FHA loans are backed by the Federal Housing Administration and are designed for buyers who cannot qualify for conventional financing. The minimum down payment is 3.5% for borrowers with a 580+ credit score, and 10% for scores between 500 and 579. Credit requirements are more lenient than conventional loans, and debt-to-income thresholds are somewhat more flexible.
The catch is mortgage insurance. FHA loans require both an upfront mortgage insurance premium (UFMIP) of 1.75% of the loan amount — typically rolled into the loan — and an annual mortgage insurance premium (MIP) of 0.55% to 1.05% of the loan balance per year, depending on your down payment and loan term. Unlike conventional PMI, FHA MIP cannot be removed if you put less than 10% down — it stays for the life of the loan.
FHA loans are best used as a stepping stone. Buy with an FHA loan when you need to, build equity and credit, then refinance into a conventional loan when you have 20% equity and a stronger credit profile.
VA Loan
Current rate: ~5.95% | Best for: Veterans, active duty military, and eligible surviving spouses
VA loans are the most favorable mortgage product available to any buyer who qualifies. There is no down payment requirement, no private mortgage insurance, and rates are typically lower than conventional loans. The only fee is a one-time VA funding fee (1.25% to 3.30% of the loan amount, depending on your down payment and whether it is a first or subsequent use), which can be rolled into the loan.
If you or your spouse has served in the military, checking your VA loan eligibility before pursuing any other loan type is essential. The monthly savings over a conventional loan — no PMI, lower rate, no down payment — can add up to tens of thousands of dollars over the life of the loan.
Jumbo Loan
Current rate: ~6.47% | Best for: Loan amounts above $806,500 in most US counties
Jumbo loans finance properties above the conforming loan limit set by the FHFA — $806,500 for most counties in 2026, with higher limits in expensive markets like San Francisco, New York, and Hawaii. Because these loans are too large for Fannie Mae and Freddie Mac to purchase, lenders hold them on their own books, which typically means stricter qualification standards.
To qualify for most jumbo loans, lenders typically require a 720+ credit score, significant cash reserves (often 12 months of payments), a debt-to-income ratio below 43%, and thorough income documentation. Rates for jumbo loans are currently slightly higher than conforming 30-year fixed rates, but the spread is narrower than it has been historically.
5/1 Adjustable-Rate Mortgage (ARM)
Current rate: ~6.10% | Best for: Buyers who plan to sell or refinance within 5 years
A 5/1 ARM gives you a fixed rate for the first 5 years, then adjusts annually based on a benchmark index (typically the SOFR) plus a margin. The initial rate is typically lower than a 30-year fixed. With current rates, the difference is narrow — about 0.15% to 0.25% — which makes the 5/1 ARM less compelling today than in environments where the spread is larger.
The ARM makes sense if you are highly confident you will sell or refinance within 5 years. If there is any chance you stay in the home longer, the 30-year fixed’s rate certainty is worth more than the modest initial savings.
How Much House Can You Actually Afford?
The mortgage payment a lender will approve and the mortgage payment that makes financial sense for your life are not always the same number. Lenders use your debt-to-income (DTI) ratio as the primary qualification metric, but passing a lender’s DTI test does not mean a payment is comfortable or sustainable for you personally.
The 28/36 Rule
The most widely used affordability guideline is the 28/36 rule. Your monthly mortgage payment (including principal, interest, taxes, insurance, and HOA) should not exceed 28% of your gross monthly income. Your total monthly debt payments — mortgage plus car loans, student loans, credit card minimums, and any other recurring obligations — should not exceed 36% of gross income.
On a $100,000 annual salary ($8,333 per month gross), the 28% guideline allows a maximum monthly housing payment of $2,333. The 36% rule allows $3,000 in total monthly debt. If your car payment is $500 per month, your available mortgage payment drops to $2,500 by the DTI calculation.
Most conventional lenders will approve DTI ratios up to 45% to 50% for well-qualified borrowers. FHA will go up to 57% in some cases. But a 50% DTI means half of every dollar you earn before taxes is committed to debt payments — which leaves very little margin for emergencies, retirement savings, or life changes. The 28/36 rule is conservative for a reason.
The Real Cost Calculation
When evaluating whether you can afford a home, add up all of these costs:
Monthly costs you pay to the lender or through escrow: Principal, interest, property tax (escrowed), homeowner’s insurance (escrowed), PMI if applicable.
Monthly costs you pay separately: HOA fees, utility cost increases from a larger home.
Ongoing ownership costs not in the mortgage: Maintenance and repairs typically run 1% to 2% of home value per year. A $400,000 home should budget $4,000 to $8,000 annually — $333 to $667 per month — for ongoing maintenance, appliances, roof, HVAC, and systems repairs. This money does not go to building equity. It is the real cost of owning versus renting.
One-time closing costs: Typically 2% to 5% of the loan amount. On a $320,000 loan, expect $6,400 to $16,000 in closing costs on top of your down payment.
7 Ways to Lower Your Monthly Mortgage Payment
1. Increase Your Down Payment
Every additional dollar toward your down payment reduces your loan balance directly and, once you cross the 20% threshold, eliminates PMI entirely. On a $400,000 home, the difference between a 10% down payment ($40,000) and a 20% down payment ($80,000) saves you roughly $150 to $250 per month in PMI alone, plus reduces your principal and interest on the smaller loan balance.
2. Improve Your Credit Score Before Applying
A 40-point improvement in your FICO score — from 700 to 740, for example — can lower your offered rate by 0.25% to 0.50%. On a 30-year $320,000 loan, a 0.50% rate reduction saves approximately $100 per month and $36,000 over the life of the loan. Paying down credit card balances below 30% utilization, disputing errors on your credit report, and avoiding new credit applications for six months before applying are the most effective short-term credit boosters.
3. Choose a Longer Loan Term
Stretching from a 15-year to a 30-year term significantly reduces your required monthly payment, though it dramatically increases total interest paid. Use the calculator’s loan comparison tab to see the exact trade-off for your specific numbers. For many buyers, the lower required payment of the 30-year with voluntary extra payments toward principal gives the best of both worlds — lower obligation, faster payoff when you can afford it.
4. Buy a Less Expensive Home
This sounds obvious, but it is the most powerful lever. Buying at $350,000 instead of $400,000 saves roughly $300 per month in principal and interest at current rates — that is $3,600 per year and $108,000 over 30 years. A home that is 12% cheaper is often 90% as functional for most families.
5. Pay Points to Buy Down Your Rate
Mortgage points (also called discount points) let you pay upfront to get a lower interest rate. One point equals 1% of the loan amount and typically reduces your rate by 0.25%. On a $320,000 loan, one point costs $3,200 and saves about $54 per month. Your break-even point is about 59 months — roughly 5 years. If you plan to stay in the home longer than 5 years, paying points is a good investment.
6. Shop at Least Three Lenders
Freddie Mac research consistently shows that borrowers who get at least three loan quotes save an average of $1,500 to $3,000 in total costs, with some saving significantly more. Lenders price the same loan differently based on their own cost of funds, risk appetite, and competitive positioning. Getting multiple quotes takes a few hours and can save you thousands.
7. Make Extra Principal Payments
After you have your loan, making even one extra payment per year — applying your full monthly payment directly to principal — shortens a 30-year loan by roughly 4 years and saves tens of thousands in interest. Use the prepayment analyzer in the calculator above to see exactly what an extra $100, $200, or $500 per month does to your total interest and payoff date.
Understanding Amortization: Where Does Your Payment Go Each Month?
Amortization is the process of repaying a loan through scheduled payments that cover both interest and principal. What surprises most homeowners is how the split works in the early years of a 30-year loan.
On a $320,000 mortgage at 6.25%, your first payment of $1,971 breaks down as follows: approximately $1,667 goes to interest and only $304 goes to principal. In other words, 85% of your first payment is interest. By year 15, the split is roughly 50/50. By year 25, the majority of each payment goes to principal. This is why the amortization table in the calculator is worth studying — it shows you that early extra payments are dramatically more valuable than later extra payments, since they eliminate the compounding interest on a higher balance.
The practical implication: if you ever have extra money to apply to your mortgage, doing it in years 1 through 7 provides a disproportionately large reduction in total interest paid compared to making the same payment in years 20 through 25.
The Refinancing Decision: When Does It Make Sense?
Refinancing replaces your current mortgage with a new one, typically to get a lower rate, change the loan term, or access equity. The decision is simpler than most people think if you use one core framework.
The break-even calculation: Divide your total closing costs by your monthly savings. If refinancing saves you $200 per month and costs $6,000, your break-even is 30 months (2.5 years). If you plan to stay in the home beyond 30 months, refinancing makes financial sense. If you might sell before then, it does not.
The 1% rule is outdated. You used to hear that refinancing only makes sense if you can lower your rate by at least 1%. This was a rough rule from an era when closing costs were higher and loans were smaller. With today’s loan sizes and competitive lender fees, a 0.5% rate reduction on a $400,000 loan saves $130 per month — enough to justify refinancing costs in 3 to 4 years. Run the actual numbers using the refinance analyzer in the calculator above rather than applying any rule of thumb.
Rate-and-term vs cash-out refinance: A rate-and-term refinance simply adjusts your rate and/or term. A cash-out refinance lets you borrow more than you owe and take the difference as cash — useful for home improvements, consolidating high-interest debt, or funding large expenses. Cash-out refinances typically carry slightly higher rates and reset your amortization clock, which has long-term cost implications worth calculating carefully.
Frequently Asked Questions About Mortgage Calculations
How is a mortgage payment calculated?
The monthly principal and interest payment uses a standard amortization formula: M = P × [r(1+r)^n] ÷ [(1+r)^n – 1], where M is the monthly payment, P is the loan principal, r is the monthly interest rate (annual rate divided by 12), and n is the total number of payments. This calculator uses this exact formula. For example, on a $320,000 loan at 6.25% for 30 years: r = 0.0625/12 = 0.005208, n = 360, and M = $1,971.
What credit score do I need for a mortgage in 2026?
The minimum credit score varies by loan type. Conventional loans typically require 620 minimum, with the best rates available at 760+. FHA loans accept as low as 500 with 10% down, or 580 with 3.5% down. VA loans have no official minimum but most lenders require 620. Jumbo loans generally require 720+.
How much should I put down on a house?
There is no single right answer. Putting 20% down eliminates PMI and gives you a smaller loan, but requires more upfront capital. Putting 3% to 5% down gets you into a home sooner and preserves cash for an emergency fund and moving costs, but adds PMI. The right amount depends on your savings, the local market, how long you plan to stay, and whether that capital could earn a better return elsewhere.
What is the difference between interest rate and APR?
The interest rate is the base cost of borrowing the principal. APR (Annual Percentage Rate) includes the interest rate plus lender fees, mortgage points, and certain closing costs, expressed as an annualized rate. APR is always equal to or higher than the interest rate. When comparing loan offers from different lenders, compare APRs rather than interest rates alone to get an accurate picture of total cost.
How long does mortgage approval take in 2026?
Pre-approval typically takes 1 to 3 business days. Full underwriting and loan approval typically takes 20 to 45 days from application to closing for a purchase loan. Having your financial documents ready — two years of tax returns, recent pay stubs, two months of bank statements, and identification — significantly speeds up the process.
Can I pay off my mortgage early without penalty?
Most conventional, FHA, VA, and jumbo loans in 2026 have no prepayment penalty. However, some lenders impose a soft prepayment penalty — typically 2% of the outstanding balance — if you pay off the loan within the first 3 to 5 years. Always check your loan agreement. If your loan has a prepayment penalty clause, factor it into any refinancing or payoff decision.
What happens if I miss a mortgage payment?
Missing a payment by one day technically puts you in default, but most lenders have a 15-day grace period before charging a late fee (typically 3% to 6% of the payment amount). After 30 days, the missed payment is reported to credit bureaus and damages your credit score. After 90 to 120 days of non-payment, the lender can begin foreclosure proceedings. If you are facing financial hardship, contact your servicer immediately — most lenders offer forbearance, loan modification, or repayment plans before initiating foreclosure.
Mortgage Calculator Disclaimer
This mortgage calculator is for informational and educational purposes only. Results are estimates based on the inputs provided. Actual monthly payments, interest rates, total costs, and loan terms will vary based on your credit score, lender, loan type, property location, debt-to-income ratio, down payment, and current market conditions at the time of your application. PMI estimates use an assumed rate of 0.85% of the loan balance per year — actual PMI rates vary by lender and borrower profile. This tool does not constitute financial advice, tax advice, or a loan commitment. Consult a licensed mortgage professional or HUD-approved housing counselor before making any real estate or financing decisions.
Mortgage rate data sourced from Freddie Mac Primary Mortgage Market Survey (PMMS), Bankrate, and Fortune as of the week of March 24, 2026. Rates shown are national averages for well-qualified borrowers. Your rate may vary.