Home Loan Calculator
Print| Principal & Interest Only | $0.00 / mo |
| Monthly Taxes & Insurance Escrow | $0.00 / mo |
The Home Loan Calculator helps home buyers and real estate investors determine exact monthly home loan payments, amortization schedules, and borrowing costs. By accounting for home price, down payment, interest rates, loan terms, property taxes, homeowners insurance, and private mortgage insurance (PMI), calculate complete home purchase affordability.
The Home Loan Amortization Formula
The monthly principal and interest payment (P&I) for a standard fixed-rate home loan is calculated using the following equation:
Monthly Principal & Interest (P&I) = P × [ r(1 + r)^n ] / [ (1 + r)^n - 1 ]
Total Monthly Mortgage (PITI) = P&I + Monthly Taxes + Monthly Insurance + Monthly PMI
Where:
- P (Loan Principal): Total home purchase price minus your down payment amount.
- r (Monthly Interest Rate): Annual home loan interest rate divided by 12 months.
- n (Total Term in Months): Number of monthly payments (360 months for a 30-year term; 180 months for a 15-year term).
- Property Taxes & Insurance: Annual local property taxes and hazard insurance divided by 12.
15-Year vs. 30-Year Home Loan Comparison
Compare monthly payments and total interest costs on a $400,000 home loan at typical interest rates:
| Home Loan Term | Assumed APR | Monthly Principal & Interest | Total Interest Paid | Total Cost of Loan |
|---|---|---|---|---|
| 15-Year Fixed | 5.75% | $3,322.56 | $198,060.80 | $598,060.80 |
| 20-Year Fixed | 6.25% | $2,924.38 | $301,851.20 | $701,851.20 |
| 30-Year Fixed | 6.50% | $2,528.27 | $510,177.20 | $910,177.20 |
Step-by-Step Home Loan Calculation Example
Here is an example computing the total monthly payment on a $350,000 purchase with 10% down:
- Calculate Loan Amount: Purchase Price ($350,000) – Down Payment ($35,000) = $315,000 Principal.
- Calculate Principal & Interest: $315,000 loan at 6.50% fixed APR over 30 years = $1,991.04/month.
- Add Property Taxes: $4,200 annual tax / 12 = $350.00/month.
- Add Homeowners Insurance: $1,440 annual insurance / 12 = $120.00/month.
- Add PMI (Down payment < 20%): 0.50% annual PMI ($1,575 / 12) = $131.25/month.
- Calculate Total Monthly Payment (PITI):
$1,991.04 + $350.00 + $120.00 + $131.25 = $2,592.29.
Frequently Asked Questions
How much home loan can I afford based on my income?
Lenders generally use the 28/36 rule: total monthly housing costs should not exceed 28% of your gross monthly income, and total debt payments (mortgage + car + credit cards) should stay under 36%.
What is Private Mortgage Insurance (PMI) and when does it drop off?
PMI is insurance protecting the lender if you put down less than 20%. Under federal law, PMI automatically cancels once your loan principal balance reaches 78% of the original home value.
How does a larger down payment impact a home loan?
A larger down payment reduces your loan principal balance, lowers your monthly payment, decreases total lifetime interest charges, and eliminates costly PMI when you reach 20% equity.
What is the difference between interest rate and APR on a home loan?
The interest rate is the base cost to borrow the loan principal. APR (Annual Percentage Rate) includes the interest rate plus upfront lender fees, points, and closing costs, providing a true measure of loan cost.