Mortgage Calculator – Monthly Payment Estimator (US & UK)

How a Mortgage Calculator Works

A mortgage is a long-term loan secured against a property, repaid in equal monthly installments over a term that is typically fifteen to thirty years. A mortgage calculator turns the four numbers that define your loan — the home price, your down payment, the interest rate, and the term — into the monthly payment you will actually make, along with the total interest the loan will cost over its life.

The first step is the loan amount: the home price minus your down payment. If you buy a $400,000 home and put down 20%, you borrow $320,000. That $320,000 is what the calculator amortizes — spreading it, plus interest, into equal monthly principal-and-interest payments using the same reducing-balance formula that underlies every amortizing loan.

PITI: what your payment really contains

Lenders and homebuyers often describe the monthly payment as PITI — Principal, Interest, Taxes and Insurance. Principal and interest repay the loan itself. Property taxes and homeowners insurance are separate costs, but in the US they are usually collected alongside the loan payment and held in an escrow account, from which the lender pays your tax and insurance bills when they fall due. That is why this calculator lets you add annual property tax and home insurance under Advanced Options: the headline figure is principal and interest, and once you add tax and insurance you see the fuller PITI payment that hits your bank account each month.

The down payment, LTV and PMI

Your down payment does more than reduce the loan. It sets your loan-to-value ratio (LTV) — the loan divided by the home price. A 20% down payment gives an 80% LTV. This matters because in the US, borrowers with an LTV above 80% are usually charged private mortgage insurance (PMI), an extra monthly premium that protects the lender, not you, and typically falls away once you build enough equity. A larger down payment lowers the loan, the monthly payment, the total interest, and can remove PMI entirely. Switch the down payment between a percentage and a cash figure to see the trade-off both ways. Note that this calculator does not automatically add PMI to the payment — read the PMI guide linked below to estimate it for your own situation.

Choosing a term: 15 vs 30 years

The loan term is one of the biggest levers you control. A 30-year mortgage keeps the monthly payment low by stretching repayment over 360 months, but you pay interest for all of them, so the lifetime interest cost is high. A 15-year mortgage roughly doubles the principal portion of each payment, raising the monthly cost, but it slashes total interest and builds equity far faster — and lenders usually offer a slightly lower rate on shorter terms. Use the term selector to compare the exact monthly payment and total interest side by side, and choose the shortest term whose payment you can comfortably sustain.

Fixed versus adjustable rates

This calculator models a fixed rate — one that stays the same for the whole term, so your principal-and-interest payment never changes. Many borrowers instead take an adjustable-rate mortgage (ARM), which fixes a lower rate for an initial period and then adjusts with a benchmark index, so the payment can rise later. If you are weighing an ARM, enter the initial rate to see the starting payment, but plan for the possibility that it changes once the fixed period ends.

US and UK: same maths, different terms

A UK repayment (capital-and-interest) mortgage amortizes in exactly the same way as a US loan, so this calculator works for both — just switch the currency to GBP. The differences are mostly in terminology and structure: UK deals are commonly fixed for an initial two-to-five-year period before reverting to the lender's variable rate, whereas the US 30-year fixed holds its rate for the entire term. Treat the UK result as the payment during your current fixed deal, and re-check it when your deal is up for renewal.

Closing costs and the bigger picture

The payment is not the only cost of a mortgage. Closing costs — lender fees, appraisal, title, and in the UK items like stamp duty and solicitor fees — are paid upfront and can add several percent to the price of buying. They do not change your monthly payment, but they are real money, so factor them into your deposit planning. When comparing offers, look past the headline rate to the annual percentage rate (APR), which folds in many of these costs, and to whether the rate is fixed or variable.

Using the calculator well

Start with a realistic home price and the rate you are likely to be offered, then adjust the down payment to see how it moves the loan amount and the payment. Try both a 15- and a 30-year term to see the interest trade-off. Add your local property tax and insurance to get a true monthly figure, and remember to budget separately for PMI if your down payment is under 20% and for closing costs at purchase. Download the amortization schedule to see how slowly the balance falls in the early years — which is exactly why extra principal payments early on save so much interest.