Mortgage Principal & Interest Calculator

How it works

Principal and interest, the P&I, is the part of a mortgage payment set entirely by the loan. Your lender fixes that amount from the loan amount, the interest rate, and the term. The standard amortized payment formula ties those three together:

• L — the loan amount you borrow
• i — the monthly interest rate (APR ÷ 12)
• n — the number of monthly payments (years × 12)

About $2,129 a month. That is the P&I on the defaults above, a $320,000 loan at 7% over 30 years.

Over the full 360 payments you hand back roughly $766,428. About $446,428 of that is interest, more than the loan itself. The calculator totals every one of those payments for you.

Only three inputs move that total: the amount borrowed, the interest rate, and the term. A lower interest rate, a shorter term, or a larger down payment each shrink the interest a borrower pays. Property tax and home insurance sit on top of the P&I, but they are not part of it.

The amortization schedule under the chart applies the same formula to every month of the mortgage term. Read it the way you would read any amortization calculator, one row per payment, and the principal share climbs as the balance falls.

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How to use this calculator

1. Enter the loan amount, which is the purchase price minus your down payment.
2. Type in the interest rate the lender quoted for that mortgage.
3. Set the term in years, usually 30 or 15.
4. Read the monthly principal and interest figure this mortgage calculator returns, then the total interest over the full term.
5. Use the chart and the amortization schedule to see how the split changes year by year.

A worked example: $320,000 at 7% for 30 years

Picture a buyer closing on a house with a $320,000 loan at 7% fixed for 30 years. Run those numbers and the payment lands at $2,129/month, the amount you would owe every month for the next 360 payments.

Here is where the long haul shows up. Over the full term you hand the lender $766,428 in total. Since you only borrowed $320,000, the rest is interest: $446,428, more than you borrowed in the first place.

That gap is the real cost of stretching a loan across three decades.

Shortening the term changes the math sharply. The same balance on a 15-year schedule runs $2,876/month, about $747 more each month, but it clears the debt in half the time. Plug in your own balance, rate, and term to see which monthly number you can actually live with.

Why is so much of an early mortgage payment interest?

Interest is charged on the mortgage debt a borrower still owes, and that balance is highest on day one. So the first payments are mostly interest, and only a thin slice reduces the principal.

Each month the balance drops, the interest charge drops with it, and the principal slice grows. That pattern is amortization, and the amortization schedule above traces it payment by payment.

On a 30-year mortgage, the standard U.S. home loan, the split takes a long time to even out. It does not reach 50/50 until the loan is roughly two thirds of the way through its term.

• Each month's interest charge is just the remaining balance times the monthly interest rate. So it falls only as fast as that balance does.
• The payment itself never moves on a fixed-rate mortgage, which means every dollar the interest charge loses, the principal gains.
• An auto loan follows the same amortization, but over 60 months instead of 360, so the front-loaded interest is far less obvious to the borrower.

Amortization is that arithmetic repeated 360 times, and the slow start is what a long term costs a borrower. Equity therefore builds slowly early and quickly late.

Reading the full amortization schedule is the easiest way to see where a given year of the loan sits. An amortization calculator lays the same rows out for any loan amount, rate and term.

Property tax, insurance and the rest of the monthly bill

The P&I here is the loan payment alone. What actually leaves a borrower's bank account each month is usually larger.

The rest is the running costs of owning the property. U.S. lenders bundle those housing costs into one figure called PITI, then collect the extras through an escrow account.

• Property tax is billed by the county and split into monthly escrow. It can add hundreds of dollars, depending on the property value and the local real estate tax rate.
• Home insurance is required by the lender, escrowed the same way, and covers the property the bank is lending against.

Private mortgage insurance (PMI) joins that bill whenever the down payment is under 20% of the purchase price. Private mortgage insurance protects the lender rather than the borrower, and it is charged monthly alongside the mortgage payment.

An FHA loan from the Federal Housing Administration allows a smaller down payment, but its mortgage insurance premium can run for the life of the loan. Federal Housing Administration borrowers also pay an upfront premium, on top of the usual closing costs and lender fees.

Two of those costs come back later. Mortgage interest and property tax are both a tax deduction for filers who itemize, and that tax deduction is only worth claiming when itemized deductions beat the standard one.

A homeowner association bills owners directly rather than through escrow, which is normal in U.S. condominiums and planned communities. Homeowner association fees can climb faster than the mortgage payment ever will.

All of it together is the full monthly housing cost, and budgeting on P&I alone is how buyers get caught short.

The CFPB's Owning a home guide lists what a lender must disclose before closing.

What moves a mortgage payment the most?

Three numbers set the P&I, and the interest rate does the most per unit of change. Half a point on a large balance is real money once it is spread across 360 payments.

• A higher interest rate raises every month's interest charge, so the payment climbs and the lifetime interest climbs faster still.
• A longer term lowers the monthly payment, but it lets interest accrue for more years. That is why a 15-year term costs more each month and far less in total.

The loan amount is the third number. A bigger down payment or a lower purchase price shrinks the balance that the rate and term act on. That smaller balance scales the whole payment down at once.

A borrower's credit score decides which interest rate a bank will quote to begin with, because it is the record of how that borrower has handled debt before. Two U.S. banks looking at the same real estate deal can price the loan differently, and changing one input in the calculator shows what a weak credit score costs a buyer.

Compare the annual percentage rate (APR) rather than the note rate alone. The annual percentage rate folds the origination fee and other closing costs into one number, so a cheap-looking rate with heavy fees stops looking cheap.

Fixed-rate mortgages hold the P&I steady for the whole term. Fixed-rate mortgages have been the U.S. standard since the Great Depression, and that stability is the reason.

Adjustable-rate mortgages start lower and reset later, and a balloon payment loan leaves a large lump sum due at the end. Lending rules for all three tightened after the 2008 financial crisis.

The down payment sets the size of the loan

A down payment is cash that never becomes debt, so it never accrues interest. Put $80,000 down on a $400,000 property and the mortgage is the $320,000 used in the defaults above.

Twenty percent down matters for a second reason. That is the level where a lender drops the private mortgage insurance requirement, so a smaller down payment adds both a bigger loan and an extra monthly premium.

• Every $10,000 added to the down payment cuts the balance the rate acts on, lowering the monthly P&I and the total interest together.
• Money saved for a down payment usually sits in high-yield savings accounts or a money market fund at a Member FDIC bank. Savings accounts and money market accounts both keep the cash safe and reachable from an ATM or a transfer until closing.
• Down payment money is not the only cash a buyer needs. Closing costs, lender fees, the appraisal fee and the first year of home insurance all fall due at once, and homeowner association dues start the month you close.

A Federal Housing Administration loan asks for less cash up front, and private mortgage insurance running for the life of the loan is the trade. Buyers still saving have to weigh a larger down payment against buying sooner.

Waiting builds the down payment, but house prices and U.S. mortgage rates can both move in the meantime.

How much is a $300,000 mortgage at 6% for 30 years?

Enter a $300,000 loan at 6% over 30 years and the principal and interest come to about $1,799 a month. Across 360 payments that is roughly $647,500 repaid, and about $347,500 of it is interest.

The first payment shows the split plainly. Interest takes $1,500 of it, so only about $299 reduces the mortgage balance in month one.

Set that against the $320,000 at 7% above. Borrowing $20,000 less at a rate one point lower removes close to $100,000 of interest over the same 30 years.

So which is worth more to a buyer, a lower purchase price or a lower interest rate? Run both loans through the amortization calculator and the answer shows up in the very first row.

What happens if you pay an extra $100 a month on the principal?

Extra money sent to a mortgage goes entirely to principal, because the interest for that month has already been charged. On the $320,000 loan at 7%, an extra $100 a month clears the debt about four years early and saves roughly $70,000 in interest.

The saving is that large because each extra dollar removes every future interest charge it would have carried. Extra payments toward principal work the same way whether they arrive monthly or as one lump sum, and the amortization schedule simply ends sooner.

• Tell the lender in writing that the money is a principal-only prepayment, or the bank may simply hold it toward next month's payment.
• Read the loan contract for a prepayment penalty fee, which is rare on U.S. mortgages now but still worth checking before a large prepayment.
• Splitting the mortgage payment in half and paying every two weeks produces one extra payment a year, with much the same effect on the calculator.

Prepaying is not always the best use of cash. Standard personal finance advice puts the expensive debt first, because a credit card balance or a personal loan charges far more than mortgage debt does.

Money put into the house is also money not sitting in savings accounts or an investment. Those opportunity costs shrink when the mortgage interest rate is high and grow when it is low.

Weigh the opportunity costs before tying cash up in the property, and keep an emergency fund you can reach from an ATM first.

How principal payments turn into home equity

Every principal dollar is equity the borrower keeps, separate from anything the property value does. The loan-to-value ratio (LTV) tracks it as the mortgage balance divided by the property value, and that ratio falls every month the balance falls.

Once LTV reaches 80%, a borrower can usually ask the lender to cancel private mortgage insurance. Rising real estate prices can reach that point sooner than the amortization schedule alone would, though the lender may want a new appraisal and charge a fee for it.

• Home equity loans pay out a lump sum at a fixed interest rate and add a second monthly payment alongside the first mortgage.
• A home equity line of credit (HELOC) works more like a credit card secured by the property, drawn and repaid as needed. A HELOC usually carries a variable rate, so that payment moves.

Home equity loans and a HELOC both turn equity back into debt, so the balance and the monthly costs rise again. Check how much equity the loan has actually built before borrowing any of it back.

Does refinancing restart the interest?

It does. Refinancing replaces the old mortgage with a new one, so the amortization schedule starts again at month one. Interest takes its largest share there.

A borrower ten years into a 30-year mortgage might refinance into another 30-year term. That reset puts them back to paying mostly interest, and the new schedule shows it in the first row.

Refinancing can still pay off when the new interest rate is low enough. A shorter term helps too, because it holds the payoff date roughly where it was. Compare the annual percentage rate on the new loan rather than the note rate, then weigh the lender fees and other closing costs of refinancing against the monthly saving to find the break-even point.

Refinancing costs money up front, so a borrower who plans to move within a couple of years rarely recovers the fees. Selling early has the same problem in reverse.

A borrower who moves after seven years has paid plenty of interest and little principal, and the remaining balance is still close to the original loan.

U.S. mortgage rates themselves move with inflation and Federal Reserve policy, which is outside any borrower's control. Refinancing becomes worthwhile mainly when inflation cools and rates follow it down.

What a borrower does control is the credit score, the down payment, and which lender gets the business.