Understanding Your Mortgage Estimate

This calculator provides a simple estimate of your monthly mortgage payment, covering only the Principal and Interest (P&I) components of the loan. It does not include other potential costs associated with homeownership.

How to Use the Calculator

1. Loan Amount (Principal): Enter the total amount of money you intend to borrow. This is typically the home price minus your down payment.
2. Annual Interest Rate (%): Input the annual interest rate quoted by your lender. Do not enter the Annual Percentage Rate (APR) here, as APR includes other fees.
3. Loan Term (Years): Select the duration over which you'll repay the loan (e.g., 15, 20, 30 years).
4. Currency Symbol: Enter your desired currency symbol (e.g., $, £, €) for display in the results. This does not affect the calculation.
5. Click "Calculate Monthly Payment."

Interpreting Your Results

• Estimated Monthly Payment (P&I): This is the amount you would pay each month towards the loan principal and the interest accrued.
• Total Principal Paid: Over the life of the loan, this will be equal to your initial Loan Amount.
• Total Interest Paid: The total sum of all interest payments made over the full term of the loan.
• Total Amount Paid: The sum of the Total Principal Paid and Total Interest Paid. This is the overall cost of the loan.

What is P&I?

Principal (P): The amount of money you borrowed from the lender.

Interest (I): The cost of borrowing the principal amount, typically expressed as an annual percentage rate.

Your monthly payment is structured so that a portion goes towards reducing the principal and another portion goes towards paying the interest. In the early years of a mortgage, a larger part of your payment goes to interest. As you pay down the principal, more of your payment shifts towards reducing the principal balance.

Important Note on Other Costs (PITI)

This calculator provides the P&I payment only. A full monthly mortgage payment often includes:

• Taxes (T): Property taxes assessed by local government, usually held in escrow by the lender and paid annually or semi-annually.
• Insurance (I): Homeowner's insurance premium, also often held in escrow. Private Mortgage Insurance (PMI) might also be required if your down payment is below a certain threshold (typically 20%).

Therefore, your actual total monthly housing payment (often called PITI) will likely be higher than the P&I estimate shown here. You may also have Homeowner Association (HOA) fees depending on the property.

Factors Affecting Your Loan

• Interest Rate: Lower rates mean lower payments and less total interest paid.
• Loan Term: Shorter terms (like 15 years) have higher monthly payments but result in significantly less total interest paid compared to longer terms (like 30 years).
• Loan Amount: Borrowing less means lower payments.
• Credit Score: A higher credit score generally qualifies you for lower interest rates.
• Debt-to-Income Ratio: Lenders look at your existing debt relative to your income.