How to use this mortgage calculator
Enter the purchase price, your down payment (as an amount or a percentage — the other box updates automatically), the interest rate you've been quoted and the length of the loan. The result updates instantly. Open Taxes, insurance & extras to include the costs that lenders bundle into your monthly bill in many countries, so you see the number that actually leaves your bank account.
- Property tax: use the annual figure from the listing or your local assessor. In the US it is often 0.5%–2.5% of the home's value per year depending on the state and county.
- Home insurance: a recent quote is best. Lenders require it, and in the US it is usually paid through an escrow account alongside your mortgage.
- HOA, strata or service charge: condos, townhouses and UK leasehold flats often carry a monthly fee for shared maintenance.
- PMI: only added when your down payment is below 20%. Rates vary with your credit score and loan-to-value; 0.3%–1.5% of the loan per year is a common range.
The mortgage payment formula
Lenders calculate the fixed principal-and-interest payment with the standard amortization formula:
M = P × r ÷ (1 − (1 + r)−n)
Here P is the amount borrowed, r is the interest rate per month and n is the total number of monthly payments. For a $320,000 loan at 6.25% over 30 years, r = 0.0625 ÷ 12 ≈ 0.005208 and n = 360, which gives a payment of about $1,970 per month before taxes and insurance.
Early in the loan, most of each payment is interest. As the balance falls, the interest portion shrinks and more goes to principal — that's why the balance chart above curves downward faster in the later years.
US, UK and Canadian mortgages: what's different?
United States
The 30-year fixed-rate mortgage is the default, and the rate is locked for the whole term. Taxes and insurance are typically collected monthly through escrow, so the full payment shown above is close to what you'll be billed. Conventional loans with less than 20% down carry PMI.
United Kingdom
UK buyers usually choose a fixed rate for two, three or five years on a 25–35 year mortgage term, then remortgage. Council tax and buildings insurance are paid separately rather than through the lender, so you can set those boxes to zero if you only want the mortgage payment. There's no PMI; instead, lenders charge higher rates at higher loan-to-value bands.
Canada
Canadian terms are usually five years within a 25 or 30-year amortization, and fixed-rate mortgages compound semi-annually by law — choose C$ and the calculator handles this for you. If your down payment is under 20%, mortgage default insurance (from CMHC, Sagen or Canada Guaranty) is required; the premium is usually added to the loan rather than paid monthly, so you can add it to the price instead of using the PMI box.
Five ways to lower your monthly payment
- Put more down. A bigger deposit shrinks the loan and, at 20% (or lower loan-to-value bands in the UK), removes mortgage insurance and unlocks better rates.
- Improve your credit before applying. Even a small rate difference changes the payment noticeably over 25–30 years.
- Shop several lenders or use a broker. Quotes for the same borrower can differ meaningfully.
- Consider a longer term. It lowers the payment but raises total interest — weigh it with the numbers above.
- Challenge the property tax assessment and shop insurance yearly. These costs are often negotiable or comparable.