Assumptions
- Fixed rate, equal monthly periods and monthly compounding. Day-count conventions used by lenders can shift the interest slightly.
- Origination fees, prepayment penalties, mortgage insurance, escrow and taxes are excluded.
- Decimal currencies are rounded to two places and the final payment is adjusted so the balance ends at exactly zero.
- Inputs stay in your browser and are never stored or transmitted.
How it is calculated
- The annual rate is divided by twelve to get the monthly rate.
- Equal payment uses the annuity formula; equal principal divides the amount by the number of months and adds that month's interest.
- Each month, balance × monthly rate becomes interest and the rest of the payment reduces the balance.
- During a grace period the principal portion is zero, and the remaining months carry the full amount afterwards.
Examples
Common mistakes
- Check for a prepayment penalty before planning to pay the loan off early.
- A variable rate will not follow this table. Look up the reset frequency and the cap on each adjustment in your agreement.
- The payment is not the housing cost. Property tax, insurance and any association dues sit on top of it.
FAQ
Equal payment or equal principal — which costs less?
Equal principal costs less in total interest, because the balance falls faster from the first month. The trade-off is that the first payment is the largest and every payment after it is smaller, which makes budgeting harder. Equal payment, the standard amortizing loan, keeps every payment identical but front-loads the interest. Pick equal payment for a steady budget, equal principal if you can absorb a heavier start and want to pay less interest.
What does a grace period do?
During the grace period you pay interest only, so the balance does not move and each of those payments is identical. When it ends, the same principal must be repaid over fewer months, so the payment jumps and the total interest rises. On a $250,000 loan at 6.5% over 30 years, one year of grace raises the payment by roughly $30 a month and adds well over $15,000 in interest.
How is the monthly payment calculated?
With the standard annuity formula. If i is the monthly rate and n the number of months, the payment is amount × i ÷ (1 − (1+i)^−n). At 6.5% on $200,000 over 30 years the monthly rate is 0.5417% and the payment is $1,264.14. The first month's interest is $200,000 × 0.5417% = $1,083.33, leaving $180.81 of principal.
Does this handle variable rates?
No, it assumes a fixed rate. For an adjustable-rate loan, run it once at the initial rate, read the balance from the schedule at the month the rate resets, then run it again with that balance, the remaining months and the expected new rate.
Why does my lender quote a slightly different figure?
Lenders differ in how they count days. Some accrue interest on actual days rather than twelfths of a year, and the first period is often longer or shorter than a month depending on the closing date. Fees rolled into the loan, mortgage insurance and escrow for taxes are not in this calculation either. Differences of a few dollars are normal.
Is anything I type sent anywhere?
No. The whole calculation runs in this page, and the amount and rate never leave your device. The CSV is also generated in your browser.