Loan & Mortgage Calculator

Fixed-rate loans use the standard amortization formula. Each month you are charged interest on the balance that remains, and the rest of your fixed payment chips away at the principal. The payment is set so the balance reaches exactly zero on the final month. In symbols, the monthly payment M = P · r(1+r)ⁿ ÷ [(1+r)ⁿ − 1], where P is the amount borrowed, r is the monthly rate (the annual rate divided by 12), and n is the total number of monthly payments.

The key consequence is that early payments are mostly interest and later payments are mostly principal. On a 30-year mortgage, you often do not cross the halfway point of paying down the principal until roughly year 18 or 19. That front-loading is why making extra principal payments early — or simply choosing a shorter term — saves so much: every dollar of principal you remove also removes all the future interest that dollar would have generated.

The single biggest mistake borrowers make is comparing loans by monthly payment alone. A lower payment almost always means a longer term and far more total interest. Always look at the total-interest figure, not just the monthly number — it is the true price of borrowing.

Remember that this calculator shows principal and interest only. Your real monthly housing cost (often abbreviated PITI) also includes property taxes, homeowners insurance, and possibly PMI if your down payment is under 20%. Budget for those separately so the payment does not surprise you at closing.

If you can, model one extra payment per year. On a typical 30-year mortgage, paying an extra month's worth of principal annually can shave roughly four to six years off the loan and save tens of thousands in interest, because that money attacks the balance before interest can accrue on it. Finally, do not confuse the interest rate with the APR — the APR folds in fees and is the better number for comparing offers from different lenders.