Faro Labs / Tools / Mortgage calculator
Mortgage calculator
Your true monthly payment is more than principal and interest. Enter the price, down payment, rate, and term to see the full PITI payment, total interest over the life of the loan, and a year-by-year amortization schedule.
Over 30 years you pay $453,884 in interest: a total loan cost of $793,884 on $340,000 borrowed.
Want the full month-by-month table and extra-payment scenarios? Use the loan amortization calculator.
Where your payments go, year by year
Early on, most of each payment is interest. This is the balance, principal, and interest for a $425,000 home at 20% down and the rate above.
| Year | Principal paid | Interest paid | Balance |
|---|---|---|---|
| 1 | $3,624 | $22,839 | $336,376 |
| 2 | $3,876 | $22,587 | $332,501 |
| 3 | $4,146 | $22,317 | $328,355 |
| 5 | $4,743 | $21,720 | $319,177 |
| 10 | $6,641 | $19,822 | $290,023 |
| 15 | $9,298 | $17,165 | $249,204 |
| 20 | $13,018 | $13,444 | $192,053 |
| 30 | $25,520 | $943 | $0 |
How a mortgage payment is calculated
principal & interest = loan × [ i(1+i)ⁿ ] ÷ [ (1+i)ⁿ − 1 ]
i = monthly rate, n = number of payments
The principal-and-interest formula amortizes the loan: it finds the fixed payment that pays the balance to exactly zero over the term. The reason your early payments barely dent the balance is that interest is charged on the whole outstanding amount first, and only what's left over reduces principal. As the balance falls, the interest portion shrinks and principal accelerates.
Why the payment isn't the whole cost
Principal and interest are only the loan. A real monthly obligation adds property tax and homeowners insurance, usually collected into an escrow account, plus PMI if you put less than 20% down, and HOA or condo dues where they apply. Budgeting off principal and interest alone is how buyers get surprised at closing.
Escrow, briefly
Most lenders collect one-twelfth of your annual taxes and insurance with every payment and pay those bills for you. Your payment can change year to year as tax assessments and premiums move, even on a fixed-rate loan.
Mortgage questions
What is included in a monthly mortgage payment?
Four things, often called PITI: principal, interest, property taxes, and insurance. If your down payment is under 20 percent you usually add private mortgage insurance (PMI), and a condo or HOA property adds dues on top. This calculator sums all of them so the number you see is the number you'll actually pay.
How much of my early payments goes to interest?
Most of it. On a 30-year loan at today's rates, the first payment is roughly three-quarters interest and one-quarter principal. The mix shifts slowly in your favor as the balance falls, which is exactly why the year-by-year schedule above is worth reading before you assume you're building equity quickly.
When can I drop PMI?
On a conventional loan, PMI is automatically cancelled once the balance reaches 78 percent of the original value, and you can request removal at 80 percent. Paying extra principal, or a market that appreciates, gets you there sooner. FHA mortgage insurance follows different rules and often lasts the life of the loan.
Does a shorter term actually save money?
Yes, substantially. A 15-year loan carries a higher monthly payment but far less total interest, because you borrow the money for half as long and usually at a lower rate. The tradeoff is flexibility: the higher required payment is locked in, whereas a 30-year loan lets you pay extra voluntarily and drop back when cash is tight.
Is this the right calculator for a rental property?
This one gives you the payment. To see whether a rental actually cash-flows after that payment, use the cash-on-cash and DSCR calculators, or paste the listing into Faro for the full underwrite.
Every calculator
Buying it as a rental?
Paste a listing and Faro underwrites the whole deal, payment, cash flow, and what to offer, from real comps.
Estimates for analysis and educational use only: not financial, investment, tax, or legal advice. Verify every number independently before making a purchase decision.