Mortgage Calculator

Why the first years are almost entirely interest

A mortgage charges interest on the outstanding balance, which is largest at the very start of the loan — so in year one, the overwhelming majority of each payment services interest, and only a small fraction reduces principal. On a typical 30-year mortgage the crossover point, where more of the payment starts going to principal than to interest, often does not arrive until roughly the halfway mark of the term.

PITI: the payment is four things, not one

A mortgage payment is usually principal, interest, taxes and insurance bundled together — PITI. Principal and interest are fixed by the loan itself; property taxes and homeowners insurance are estimated by the lender and can be revised annually as tax assessments and premiums change, which is why a payment that looked fixed at closing can still shift year to year.

Why 20% down is the number everyone cites

Putting down less than 20% of a home's price typically triggers private mortgage insurance, an added monthly cost that protects the lender, not the borrower, in case of default. It is usually removable once the loan balance drops to roughly 80% of the home's value through payments or appreciation — which is why 20% down became the reference point, even though loans with less down payment are common and widely available.

What one extra payment a year actually buys

Because extra payments reduce principal directly, and principal reduction is worth more the earlier it happens, a single extra payment made early in a 30-year mortgage typically eliminates more total interest than the identical extra payment made in year twenty. This is the same mechanism that makes biweekly payment plans popular — they effectively add one extra monthly payment a year without it feeling like a lump sum.

What this calculator assumes

This tool assumes a fixed rate held for the full term, with taxes and insurance entered as flat estimates rather than the variable figures your escrow account will actually see. An adjustable-rate mortgage, a tax reassessment, or a change in your insurance premium will all move a real payment away from this projection over time. It models the loan mechanics precisely; it does not model your specific lender's escrow account.