Conventional Loan Calculator

How the Mortgage Calculator Works #

This calculator uses standard amortization math to compute your monthly mortgage payment — the same formula lenders use. Enter your home price, down payment, loan term, and interest rate, and the calculator instantly shows your estimated monthly payment broken down into its components: principal and interest, property tax, homeowner's insurance, and PMI if applicable.

The principal and interest portion is calculated using the amortization formula: your loan amount multiplied by the monthly interest rate, adjusted for the number of payments over the loan term. On a 30-year, $320,000 loan at 6.5% interest, the P&I payment works out to approximately $2,023 per month. Adding typical property tax and insurance costs brings the total monthly payment to roughly $2,500–$2,700 in most markets.

What's Included in Your Monthly Payment #

A full mortgage payment — often called PITI — covers four items:

• Principal — The portion that reduces your outstanding loan balance each month. In early years, this is a small fraction of your payment. By the final years of your loan, nearly all of each payment goes to principal.
• Interest — The lender's fee for extending credit. Interest is charged on the remaining balance, so it starts high and decreases as you pay down the loan. On a $320,000 loan at 6.5%, you pay nearly $1,733 in interest in your very first month.
• Property Tax — Most lenders collect one-twelfth of your annual property tax bill each month into an escrow account, then pay the county on your behalf. Typical property tax rates run between 0.5% and 2.5% of the home's assessed value depending on your state and county. At 1.2% on a $400,000 home, that's $400 per month.
• Homeowner's Insurance — Required by all lenders, homeowner's insurance protects both you and the lender from damage to the property. National average premiums run about $1,200–$2,000 per year, though coastal and weather-prone areas can be significantly higher.

Understanding PMI #

Private Mortgage Insurance (PMI) is required when your down payment is less than 20% of the home's purchase price. PMI protects the lender — not you — in case you default on the loan. On a conventional loan, PMI typically costs between 0.5% and 1.5% of the loan amount per year, or roughly $50–$150 per month for every $100,000 borrowed. This calculator uses 0.85% as the default PMI rate, a common midpoint estimate.

The good news: PMI is not permanent. Once you've built 20% equity in your home — through principal payments, appreciation, or both — you can request cancellation. Under the Homeowners Protection Act, lenders must automatically cancel PMI when your loan balance reaches 78% of the original purchase price.

The fastest way to avoid PMI is to put down 20% upfront. On a $400,000 home, that's $80,000. If that's out of reach, some lenders offer "piggyback" loans (an 80/10/10 structure) or lender-paid PMI at a slightly higher interest rate as alternatives worth exploring.

30-Year vs. 15-Year Mortgage #

The two most common loan terms are 30 years and 15 years, and the difference in total cost is substantial. A 30-year mortgage offers lower monthly payments, making it easier to qualify and leaving more cash flow for savings and other goals. However, you'll pay interest for twice as long, which adds up to tens of thousands of dollars more over the life of the loan.

A 15-year mortgage typically comes with a lower interest rate — often 0.5–0.75% below a comparable 30-year rate — and you pay it off in half the time. For example: a $320,000 loan at 6.5% over 30 years costs approximately $409,000 in interest. The same loan at 5.75% over 15 years costs roughly $155,000 in total interest — a savings of over $250,000. The trade-off is a monthly payment roughly 40% higher. Use the term selector above to compare both scenarios instantly.

How Down Payment Affects Your Payment #

A larger down payment reduces your loan amount, which directly lowers your monthly P&I payment. But it also has secondary effects: once you cross the 20% threshold, PMI disappears — saving another $100–$300 per month depending on loan size. Many lenders also offer better interest rates to borrowers with larger down payments, which compounds the savings over a 30-year term.

If you're deciding between a higher down payment and keeping cash reserves, consider that most financial advisors recommend maintaining 3–6 months of expenses in savings after closing. Use the down payment input above to find the sweet spot for your situation.

Frequently Asked Questions #

Related Calculators #

• Extra Payment Calculator — See how extra payments reduce your loan term and total interest paid
• PMI Calculator — Calculate your exact PMI cost and when it ends
• Down Payment Calculator — Figure out how much to save and when you'll hit your goal
• Debt-to-Income Calculator — Check your DTI ratio before applying for a mortgage
• Closing Cost Calculator — Estimate all closing costs before you finalize your purchase
• Home Affordability Calculator — Not sure how much you can afford? Start here.
• Interest-Only Calculator — See how IO payments compare to standard amortization