Mortgage Payment Calculator

Understanding Mortgage Calculations

A mortgage is likely the largest financial commitment you'll ever make, which is why understanding how mortgage payments work is essential. Our free mortgage calculator helps you quickly determine your monthly payment based on the home price, down payment, interest rate, and loan term. Whether you're a first-time homebuyer or preparing for your real estate licensing exam, mastering these calculations is crucial for making informed financial decisions.

How Monthly Mortgage Payments Are Calculated

Monthly mortgage payments are calculated using an amortization formula that ensures each payment covers both principal and interest. In the early years of your loan, most of your payment goes toward interest. Over time, more of each payment goes toward principal as the loan balance decreases. This is why making extra principal payments early in the loan can save significant money in interest over time.

The Impact of Down Payment on Your Mortgage

Your down payment directly affects your loan amount, monthly payment, and whether you'll need to pay Private Mortgage Insurance (PMI). A larger down payment means lower monthly payments and less interest paid over the life of the loan. Putting down at least 20% also eliminates the need for PMI, which can save you hundreds of dollars per month.

Mortgage Math for Real Estate Exams

Real estate licensing exams frequently test mortgage calculations, including monthly payment formulas, loan-to-value ratios, and qualification criteria. Understanding how to calculate payments and interpret loan terms will help you pass your exam and provide better service to clients as a licensed real estate professional. Use this calculator to practice different scenarios and build your understanding.