Mortgage calculator

On a $400K loan at 7%, adding $200/month to your payment pays off the mortgage 7 years early and saves $118,000 in interest. That's a return no savings account can match. The boring discipline of an extra $200 buys you seven years of freedom. Even $100/month saves $71,000 and cuts 4.5 years off the loan.

A $400K loan at 7% for 30 years costs $558,000 in interest. The same loan at 6.5% for 15 years costs $227,000 in interest—a $331,000 difference. The catch: your monthly payment jumps from $2,661 to $3,484. But if you can afford the extra $823/month, you save a third of a million dollars.

Interest is calculated on the remaining balance. When you owe $400,000, the monthly interest at 7% is about $2,333. Your $2,661 payment leaves only $328 for principal. That's why early payments feel like treading water. By year 20, you'll owe $185K and most of your payment finally goes to principal. Amortization rewards patience—or extra payments.

P&I is just the loan. Add property tax ($200–$1,000/month depending on location), homeowner's insurance ($100–$300/month), PMI if under 20% down ($100–$300/month), and HOA fees if applicable. A $2,661 P&I payment can easily become $3,500–$4,000 in total housing cost. Budget for the full picture, not just the mortgage.

One point costs 1% of the loan ($4,000 on a $400K mortgage) and typically lowers your rate by 0.25%. That saves about $60/month and $21,600 over 30 years. Break-even: about 5.5 years. If you'll stay longer than that, points pay off. If you might move or refinance sooner, skip them.

Take the loan amount, monthly interest rate (annual rate ÷ 12), and total payments (years × 12). Use the amortization formula: P × [r(1+r)^n] / [(1+r)^n − 1]. For a $400K loan at 7% for 30 years: $400,000 × [0.00583(1.00583)^360] / [(1.00583)^360 − 1] = $2,661/month. This covers principal and interest only—not taxes or insurance.

7% is historically moderate but feels high compared to the 3% rates of 2020–2021. The 50-year average is around 7.7%. At 7%, a $400K loan costs $558K in interest over 30 years. At 6%, it's $463K. At 5%, $373K. Whether 7% is 'good' depends on your alternatives—waiting for rates to drop means paying rent and risking home prices rising.

15-year saves money; 30-year saves cash flow. A $400K loan at 6.5% for 15 years costs $3,484/month but only $227K total interest. At 7% for 30 years, it's $2,661/month but $558K interest—$331K more. If you can afford the higher payment and won't invest the difference, 15-year wins. If the extra $823/month would go to retirement accounts earning 8%+, 30-year might be smarter.

On a $400K loan at 7% for 30 years, paying an extra $500/month saves $189,000 in interest and pays off the loan 12 years early. You'd pay off a 30-year mortgage in 18 years. Even $100/month extra saves $71,000 and cuts 4.5 years. Extra principal payments have an effective return equal to your interest rate—guaranteed, tax-free.

The 28% rule suggests keeping housing costs under $2,333/month on $100K gross income. After estimated tax ($400) and insurance ($150), that leaves about $1,783 for P&I. At 7% for 30 years, that supports roughly a $268K loan—so a $335K house with 20% down. But 'can afford' and 'should buy' aren't the same. Factor in your other debts, savings goals, and job stability.

One point costs 1% of the loan and typically lowers your rate by 0.25%. On a $400K mortgage, one point costs $4,000 and saves about $60/month ($21,600 over 30 years). Break-even is about 5.5 years. Buy points if you'll stay longer than break-even. Skip them if you might move, refinance, or want to keep cash for emergencies. The math favors points for long-term owners.

Private mortgage insurance protects the lender when you put down less than 20% on a conventional loan. It adds to your monthly payment until you reach roughly 20% equity. FHA loans use different mortgage insurance rules—always read your loan estimate.

This page models fixed-rate amortization—same rate for the whole term. Adjustable-rate mortgages (ARMs) change after an initial fixed period. Use fixed outputs to benchmark; get an ARM amortization schedule from your lender for real ARM payments.

Financing closing costs raises principal and interest. If you add $8,000 to a 30-year note at 7%, you pay interest on that $8,000 for decades. Cash-paying closing costs wins if you have liquidity; financing can still be rational if cash earns more after tax than the mortgage rate—but do the math.

Normalize rate, points, fees, and APR on the same loan amount and term. Two offers with the same rate can differ by thousands in fees. A lower payment with a longer term is not automatically cheaper—check total interest.

Property taxes are usually rolled into your monthly mortgage payment via escrow—paid monthly to your lender, who pays your county annually. On a $400K home in a 1.5% tax state, that's $6,000/year or $500/month added to your P&I payment. Taxes vary by location—Texas averages 1.6%, California 0.7%. Factor them into affordability.

Yes, but only if you itemize deductions and the mortgage is secured by your primary or secondary home. The 2024 standard deduction is $29,200 (married) or $14,600 (single)—if your mortgage interest plus other itemized deductions don't exceed that, you won't benefit. Early in a mortgage when interest is highest, itemizing often makes sense.

Compare payment at quoted rate vs +0.25% stress. If the higher payment breaks budget, locking or buying points may be worth the upfront cost.

Model new payment vs old, divide closing costs by monthly savings to get months to break even. Skip refi if you will sell before that horizon unless you need cash-flow relief now.

Run identical loan amounts at typical 15- and 30-year rates. Note payment jump vs interest saved—decide whether the extra payment is sustainable with your other goals.

Compare P&I-only to rent for the same home tier, then add taxes and insurance manually. Ownership carries maintenance; renting carries renewal risk—this tool handles the loan slice only.

Use a round-number loan to show how early payments skew interest-heavy and why extra principal moves the payoff date—great for reproducible classroom demos with cited formula version.