Mortgage calculator
Monthly payment, total interest and the effect of overpaying a little each month. Spoiler: most of the interest is paid at the start.
How a mortgage payment is calculated
Most mortgages are fully amortizing loans with a fixed payment: you pay the same amount every month, but what it is made of changes. At first it is almost all interest, because interest is charged on a large debt; over the years, more and more of each payment goes towards the principal. The payment is:
payment = C · i / (1 − (1 + i)−n)
where C is the amount borrowed, i the monthly rate (the annual rate divided by 12) and n the number of payments. The “What you pay each year” chart makes it obvious: the first bars are almost all interest.
Why paying early saves so much
Every dollar you pay early stops accruing interest for all the remaining years. That is why a few hundred a month at the start of the loan can save tens of thousands and cut years off the term. Before doing it, check whether your lender charges a prepayment penalty and compare with what you could earn by investing that money instead.
Down payment and term
A 20% down payment avoids private mortgage insurance on most loans, and you also need to budget for closing costs, typically 2 to 5% of the price. A longer term lowers the monthly payment but sends total interest soaring: compare 15 and 30 years in the calculator.
The calculation assumes a fixed rate for the whole loan and excludes taxes, insurance, PMI, fees and closing costs. With an adjustable rate, the payment changes with the index. This is not financial advice.
Frequently asked questions
What is the monthly payment on a 200,000 mortgage over 30 years?
At a fixed rate of 3 %, the payment is about 843 a month, and by the end of the loan you will have paid about 103,600 in interest. At 2 % it drops to about 739 and at 4 % it rises to about 955. Try other amounts and terms in the calculator.
Is it better to overpay to shorten the term or lower the payment?
Shortening the term saves more interest, because you keep the same payment and the debt disappears sooner. Lowering the payment saves less, but frees up cash every month and gives you more room if your income changes. If you can afford it, shortening the term is almost always the more profitable option.
How much do I need to earn to get a mortgage?
Lenders usually require the payment to stay below 28-35 % of household income, depending on the country and the bank. For an 843 payment you would need roughly 2,400 to 3,000 a month in income. Most also lend at most 80 % of the price without extra insurance, so you need to save the rest plus closing costs.
Fixed or variable rate mortgage?
With a fixed rate, the payment never changes and you know from day one what you will pay. With a variable or adjustable rate, the payment follows a reference index: it usually starts cheaper, but can rise sharply when rates go up, as happened in 2022 and 2023. Hybrid mortgages combine a few fixed years with a variable rate afterwards.