Mortgage Calculator

How Your Mortgage Payment Is Calculated

SmartAsset’s mortgage calculator estimates your monthly payment. It includes principal, interest, taxes, homeowners insurance and homeowners association fees. Adjust the home price, down payment or mortgage terms to see how your monthly payment changes.

You can also try our home affordability calculator if you’re not sure how much money you should budget for a new home.

A financial advisor can build a financial plan that accounts for the purchase of a home. To find a financial advisor who serves your area, try SmartAsset's free online matching tool.

Using SmartAsset’s Mortgage Calculator

Using SmartAsset’s Mortgage Calculator is relatively easy. First, enter your mortgage details – home price, down payment, mortgage interest rate and loan type. 

For a more detailed monthly payment calculation, click the dropdown for “Taxes, Insurance & HOA Fees.” Here, you can fill out the home location, annual property taxes, annual homeowners insurance and monthly HOA or condo fees, if applicable.

1. Add Home Price

Home price, the first input for our calculator, reflects how much you plan to spend on a home. 

For reference, the median sales price of a home in the U.S. was $419,200 in the fourth quarter of 2024, according to the Federal Reserve Bank of St. Louis. However, your budget will likely depend on your income, monthly debt payments, credit score and down payment savings. 

The 28/36 rule or debt-to-income (DTI) ratio is one of the primary determinants of how much a mortgage lender will permit you to spend on a home. This guideline dictates that your mortgage payment shouldn’t go over 28% of your monthly pre-tax income and 36% of your total debt. This ratio helps your lender understand your financial capacity to pay your mortgage each month. The higher the ratio, the less likely it is that you can afford the mortgage.

Here’s the formula for calculating your DTI:

DTI = Total Monthly Debt Payments ÷ Gross Monthly Income x 100

To calculate your DTI, add all your monthly debt payments, such as credit card debt, student loans, alimony or child support, auto loans and projected mortgage payments. Next, divide by your monthly, pre-tax income. To get a percentage, multiply by 100. The number you’re left with is your DTI.

2. Enter Your Down Payment

Many mortgage lenders generally expect a 20% down payment for a conventional loan with no private mortgage insurance (PMI). Of course, there are exceptions. 

One common exemption includes VA loans, which don’t require down payments, and FHA loans often allow as low as a 3% down payment (but do come with a version of mortgage insurance). 

Additionally, some lenders have programs offering mortgages with down payments as low as 3% to 5%. 

The table below shows how the size of your down payment will affect your monthly mortgage payment on a median-priced home:

The payment calculations above do not include property taxes, homeowners insurance and private mortgage insurance (PMI). Monthly principal and interest payments were calculated using a 6.75% mortgage interest rate – the approximate 52-week average as April 2025, according to Freddie Mac.  

3. Mortgage Interest Rate

For the mortgage rate box, you can see what you’d qualify for with our mortgage rates comparison tool. Or, you can use the interest rate a potential lender gave you when you went through the pre-approval process or spoke with a mortgage broker. 

If you don’t have an idea of what you’d qualify for, you can always put an estimated rate by using the current rate trends found on our site or on your lender’s mortgage page. Remember, your actual mortgage rate is based on a number of factors, including your credit score and debt-to-income ratio.

For reference, the 52-week average in early April 2025 was approximately 6.75%, according to Freddie Mac. 

4. Select Loan Type

In the dropdown area, you have the option of selecting a 30-year fixed-rate mortgage, 15-year fixed-rate mortgage or 5/1 ARM. 

The first two options, as their name indicates, are fixed-rate loans. This means your interest rate and monthly payments stay the same over the course of the entire loan. 

An ARM, or adjustable rate mortgage, has an interest rate that will change after an initial fixed-rate period. In general, following the introductory period, an ARM’s interest rate will change once a year. Depending on the economic climate, your rate can increase or decrease. 

Most people choose 30-year fixed-rate loans, but if you’re planning on moving in a few years or flipping the house, an ARM can potentially offer you a lower initial rate. However, there are risks associated with an ARM that you should consider first. 

5. Add Property Taxes 

When you own property, you are subject to taxes levied by the county and district. You can input your zip code or town name using our property tax calculator to see the average effective tax rate in your area.

Property taxes vary widely from state to state and even county to county. For example, New Jersey has the highest average effective property tax rate in the country at 2.33% of its median home value. Hawaii, on the other hand, has the lowest average effective property tax rate in the nation at just 0.27%. 

Property taxes are generally a percentage of your home’s value. Local governments typically bill them annually. Some areas reassess home values annually, while others may do it less frequently. These taxes generally pay for services such as road repairs and maintenance, school district budgets and county general services.

6. Include Homeowner’s Insurance

Homeowners insurance is a policy you purchase from an insurance provider that covers you in case of theft, fire or storm damage (hail, wind and lightning) to your home. Flood or earthquake insurance is generally a separate policy. Homeowners insurance can cost anywhere from a few hundred dollars to thousands of dollars depending on the size and location of the home.

When you borrow money to buy a home, your lender requires you to have homeowners insurance. This policy protects the lender’s collateral (your home) in case of fire or other damage-causing events.

7. Add HOA Fees

Homeowners association (HOA) fees are common when you buy a condominium or a home that’s part of a planned community. Generally, HOA fees are charged monthly or yearly. The fees cover common charges, such as community space upkeep (such as the grass, community pool or other shared amenities) and building maintenance. 

The average monthly HOA fee is $291, according to a 2025 DoorLoop analysis. 

HOA fees are an additional ongoing fee to contend with. Keep in mind that they don’t cover property taxes or homeowners insurance in most cases. When you’re looking at properties, sellers or listing agents usually disclose HOA fees upfront so you can see how much the current owners pay.

Mortgage Payment Formula

For those who want to know the math that goes into calculating a mortgage payment, we use the following formula to determine a monthly estimate:

• M = Monthly Payment
• P = Principal Amount (initial loan balance)
• i = Interest Rate
• n = Number of Monthly Payments for 30-Year Mortgage (30 * 12 = 360, etc.)

Understanding Your Monthly Mortgage Payment

Before moving forward with a home purchase, you’ll want to closely consider the different components of your monthly payment. Here’s what to know about your principal and interest payments, taxes, insurance and HOA fees, as well as PMI. 

Principal and Interest

The principal is the loan amount that you borrowed and the interest is the additional money that you owe to the lender that accrues over time and is a percentage of your initial loan. 

Fixed-rate mortgages will have the same total principal and interest amount each month, but the actual numbers for each change as you pay off the loan. This is known as amortization. At first, most of your payment goes toward interest. Over time, more goes toward principal.

The table below breaks down an example of amortization of a mortgage for a $419,200 home:

This table depicts the loan amortization for a 30-year mortgage on a median-priced home ($419,200) bought with a 20% down payment. The payment calculations above do not include property taxes, homeowners insurance and private mortgage insurance (PMI).

Taxes, Insurance and HOA Fees

Your monthly mortgage payment comprises more than just your principal and interest payments. Your property taxes, homeowner’s insurance and HOA fees will also be rolled into your mortgage, so it’s important to understand each. Each component will vary based on where you live, your home’s value and whether it’s part of a homeowner’s association. 

For example, say you buy a home in Dallas, Texas, for $419,200 (the median home sales price in the U.S.). While your monthly principal and interest payment would be approximately $2,175, you’ll also be subject to an average effective property tax rate of approximately 1.72%. That would add $601 to your mortgage payment each month.

Meanwhile, the average homeowner’s insurance bill in the state is $2,374, according to a NBC 5 Investigates report in 2024. This would add another $198, bringing your total monthly mortgage payment to $2,974. 

Private Mortgage Insurance (PMI)

Private mortgage insurance (PMI) is an insurance policy required by lenders to secure a loan that’s considered high risk. You’re required to pay PMI if you don’t have a 20% down payment and you don’t qualify for a VA loan. 

The reason most lenders require a 20% down payment is due to equity. If you don’t have high enough equity in the home, you’re considered a possible default liability. In simpler terms, you represent more risk to your lender when you don’t pay for enough of the home.

Lenders calculate PMI as a percentage of your original loan amount. It can range from 0.3% to 1.5% depending on your down payment and credit score. Once you reach at least 20% equity, you can request to stop paying PMI.

How to Lower Your Monthly Mortgage Payment

There are four common ways to lower your monthly mortgage payments: buying a more affordable home, making a larger down payment, getting a more favorable interest rate and choosing a longer loan term. 

Buy a Less Expensive Home

Simply buying a more affordable home is an obvious route to lowering your monthly mortgage payment. The higher the home price, the higher your monthly payments. For example, buying a $600,000 home with a 20% down payment payment and 6.75% mortgage rate would result in a monthly payment of around $3,113 (not including taxes and insurance). However, spending $50,000 less would lower your monthly payment by approximately $260 per month. 

Make a Larger Down Payment

Making a larger down payment is another lever a homebuyer can pull to lower their monthly payment. For example, increasing your down payment on a $600,000 home to 25% ($150,000) would lower your monthly principal and interest payment to approximately $2,920, assuming a 6.75% interest rate. This is especially important if your down payment is less than 20%, which triggers PMI, increasing your monthly payment. 

Get a Lower Interest Rate

You don’t have to accept the first terms you get from a lender. Try shopping around with other lenders to find a lower rate and keep your monthly mortgage payments as low as possible.

Choose a Longer Loan Term

You can expect a smaller bill if you increase the number of years you’re paying the mortgage. That means extending the loan term. For example, a 15-year mortgage will have higher monthly payments than a 30-year mortgage loan, because you’re paying the loan off in a compressed amount of time.

Paying Your Mortgage Off Early

Some financial experts recommend paying off your mortgage early, if possible. This approach may seem less appealing when mortgage rates are low, but becomes more attractive when rates are higher.

For example, buying a $600,000 home with a $480,000 loan means you’ll pay nearly $640,000 in interest over the life of the 30-year mortgage. Paying the mortgage off even a few years early can result in thousands of dollars in savings. 

How to Pay Your Mortgage Off Early

There’s a simple yet shrewd strategy for paying your mortgage off early. Instead of making one payment per month, you might consider splitting your payment in two, sending in one half every two weeks. Because there are 52 weeks in a year, this approach results in 26 half-payments — or the equivalent of 13 full payments annually. 

That extra payment reduces your loan’s principal. It shortens the term and cuts interest without changing your monthly budget significantly.

You can also simply pay more each month. For example, increasing your monthly payment by 12% will result in making one extra payment per year. Windfalls, like inheritances or work bonuses, can also help you pay down a mortgage early.