Free Mortgage Calculator & Home Financing Guide

Your monthly payment (often called PITI) has four components: Principal (the loan amount you borrowed), Interest (the cost of borrowing), Taxes (property taxes), and Insurance (homeowner's insurance). Our calculator uses the standard amortization formula: M = P × [r(1+r)^n] / [(1+r)^n − 1], where P is the loan amount, r is the monthly interest rate, and n is the number of payments.

Minimum credit score requirements vary by loan type. Conventional loans typically require 620+, FHA loans allow 580 (or 500 with 10% down), and VA loans have no official minimum but most lenders look for 620+. A higher score can qualify you for a lower interest rate, which can save tens of thousands of dollars over the life of the loan.

While 20% down eliminates Private Mortgage Insurance (PMI), many first-time buyers put down much less. FHA loans require as little as 3.5% down, and conventional loans can go as low as 3–5%. However, a smaller down payment means higher monthly payments and the added cost of PMI — typically 0.5% to 1% of the loan amount annually.

PMI (Private Mortgage Insurance) protects the lender, not you. It's required when your down payment is less than 20% of the home's value. You can request cancellation once your loan balance reaches 80% of the home's original value, and it must be automatically canceled at 78%. Making extra principal payments can help you reach this threshold faster.

A 30-year mortgage offers lower monthly payments but you'll pay significantly more interest over time. A 15-year mortgage typically has a lower interest rate and cuts your total interest roughly in half, but the monthly payment is much higher. The right choice depends on your cash flow, other financial goals, and how long you plan to stay in the home.

An amortization schedule breaks down every mortgage payment into principal and interest. In the early years, the vast majority of your payment goes toward interest — often 80% or more. Over time, this reverses. Understanding your amortization schedule can help you decide whether making extra payments, refinancing, or choosing a shorter term makes sense for you.

Making half your monthly payment every two weeks results in 26 half-payments per year — the equivalent of 13 full monthly payments instead of 12. This extra payment per year can shave 4–5 years off a 30-year loan and save tens of thousands of dollars in interest. Before setting this up, confirm your lender applies payments correctly and check for any fees.

Lenders typically follow the 28/36 rule: your total monthly housing costs should not exceed 28% of your gross monthly income, and your total debt payments (housing + car loans + student loans + credit cards) should not exceed 36%. For example, with a $100,000 annual income ($8,333/month), your housing budget would be about $2,333/month maximum.

Closing costs typically range from 2% to 5% of the home's purchase price. They include loan origination fees, appraisal, title search and insurance, attorney fees, prepaid property taxes, homeowners insurance, and escrow deposits. Some costs are negotiable, and you may be able to roll them into the loan or negotiate for the seller to pay a portion.

Even a small change in interest rate can have a big impact. On a $400,000 loan, a 6% rate gives a monthly P&I payment of about $2,398, while a 7% rate increases it to $2,661 — that's $263 more per month and nearly $95,000 more in interest over 30 years. Use our interactive calculator to see how different rates affect your specific scenario.