How to use it
Enter the amount you are borrowing, not the purchase price. Subtract your deposit first.
Set the interest rate and the term. Thirty years is the usual US default, but run fifteen alongside it anyway. The interest difference over a full term is larger than most people expect, and seeing it costs you one extra calculation.
Then add annual property tax and home insurance. Leave those out and all you get is principal and interest.
The payment you were quoted is not the payment you make
This catches first-time buyers constantly.
Mortgage adverts and comparison sites quote principal and interest. Your actual bill is PITI: principal, interest, taxes, insurance. Your lender normally collects that tax and insurance into an escrow account and pays it out for you, so it arrives bundled into one monthly figure that looks nothing like the advertised rate.
The gap is not small. Tax and insurance on a typical American home can add several hundred dollars a month. Budget against the advertised number and the real payment often lands 20 or 30 percent higher.
Add PMI and an HOA fee and it stretches further still.
Fill in tax and insurance here before you decide what you can afford.
PMI: ask at 80 percent, do not wait for 78
Put down less than 20 percent and you are almost certainly paying private mortgage insurance. It protects your lender. Not you. From your side it is pure cost.
The Homeowners Protection Actof 1998 gives you two separate exits, and the difference between them is money.
At 80 percent loan-to-value, measured against your home's original value on the loan's own amortization schedule, you have the legal right to request cancellation in writing. It is not automatic. You have to ask, and no lender is obliged to remind you the date arrived.
At 78 percent, the servicer must terminate it automatically. Asked or not.
That two percent of your loan sitting between the thresholds is a window where you could have stopped paying, if you knew to send the letter. Nobody sends it for you. On a $300,000 loan the stretch can run a year or more of premiums you never owed.
Two conditions apply. You need a good payment history, and your lender may ask you to show the property has not fallen below its original value.
One more catch: if you are behind on the loan when it hits 78 percent, automatic termination waits until you are current again.
Where your early payments actually go
Open the amortization schedule and one thing jumps out. Almost none of an early payment touches the balance.
Interest is charged on what you still owe. At the start you owe nearly everything, so nearly all of the payment is interest and a sliver goes to principal. As the balance drops, the interest share shrinks and the principal share grows. That is why the schedule speeds up toward the end.
On a 30-year loan at typical rates, the crossover where you finally pay more principal than interest lands around year eighteen. For the first half of the loan, most of what you hand over is rent on the money.
Which is also why selling in year three feels like you built no equity at all. You did not build much. The schedule was always going to do that. It is worth looking at the year-by-year table here before you assume a short hold will leave you with a deposit for the next place, because between the front-loaded interest, the agent's commission, and closing costs on both ends, a sale inside the first few years can leave a seller with less cash than they put in. None of that means buying was wrong. It means the maths rewards staying put, and the schedule is where you can see exactly how long it takes to turn.
Extra payments do more than they look like they do
Extra money goes straight to principal. Interest is charged on the balance, so killing principal early wipes out every future interest payment that balance would have produced.
One extra monthly payment a year takes roughly four to six years off a 30-year loan.
You can get the same effect by paying half your mortgage every two weeks, since that works out to thirteen monthly payments instead of twelve. Exact savings hinge on your rate, so run your own numbers here rather than trusting a rule of thumb.
Check two things first. Confirm there is no prepayment penalty, rare on modern US mortgages but not extinct. Then make sure extra payments are actually applied to principal, because some servicers park them as a prepayment of next month's bill unless you tell them otherwise.
And remember the money has other jobs. At a low fixed rate, clearing high-interest debt or capturing a retirement match usually beats overpaying the mortgage.
A worked example
Borrow $300,000 at 6.5 percent over 30 years. Principal and interest come to about $1,896 a month, and you pay roughly $382,000 in interest across the full term. That is more than the house cost.
Switch the same loan to 15 years and the monthly payment climbs steeply while total interest falls by well over half. Run both here with your own figures before you decide which one you can actually live with.
Frequently asked questions
Why is my real mortgage payment higher than this?
You are probably looking at principal and interest only. Add property tax, homeowners insurance, PMI if you have it, and any HOA fee, and you land on the actual bill. That total is often 20 to 30 percent above the advertised figure, which is why so many buyers get a shock at closing.
When can I get rid of PMI?
Request it in writing at 80 percent loan-to-value. Your servicer must cancel automatically at 78 percent regardless. Mark the 80 percent date and send the letter, because nobody will prompt you.
Does this use my home's current market value for PMI?
No. The legal thresholds run off the original value and the loan's own amortization schedule, not today's market price.
Should I take a 15-year or a 30-year term?
Run both here and compare. Fifteen costs far less interest overall but demands a much higher payment every single month, so the real question is whether that payment stays comfortable in a bad month rather than an average one.
How much does one extra payment a year save?
Usually four to six years off a 30-year term. Your rate drives the rest, so use your own numbers.
Can I use this for car loans and personal loans?
Yes. Any fixed-rate amortizing loan works, including auto loans, personal loans, and student loans. Enter the amount, the annual rate, and the term in years.
This tool is for general information only and is not financial advice.
Related: compare a refinance · auto loan payments · what you actually take home · pay off other debt first.