Loan & Mortgage Calculator

Monthly payment, total interest and total cost — updates as you type.

Loan amount ($)

Interest rate (% / yr)

Term (years)

Monthly payment

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Total interest

$—

Total cost

$—

How loan payments work

A fixed-rate loan is amortized: you pay the same amount every month, but early payments are mostly interest and later ones are mostly principal. The monthly payment comes from this formula:

M = P · r · (1 + r)^n / ((1 + r)^n − 1)

where P is the loan amount, r is the monthly interest rate (annual rate ÷ 12), and n is the total number of monthly payments (years × 12). This calculator covers principal and interest only — property tax, insurance and fees are separate. To compare rates or work out a down-payment percentage, try our percentage calculator.

The amortization formula

A fixed-rate loan uses one equation to find the single monthly payment that clears the balance exactly at the end of the term.

M = P × r × (1 + r)^n ÷ ((1 + r)^n − 1) P = principal r = monthly rate (annual ÷ 12 ÷ 100) n = number of payments (years × 12)

$320,000 over 30 years at 6.5%:

r = 0.065 ÷ 12 = 0.0054167 · n = 360

M ≈ $2,022 per month, and about $408,000 of interest over the full term.

Why early payments are almost all interest

Each month, interest is charged on the balance you still owe. On day one that balance is the whole loan, so most of your payment is interest and only a sliver reduces principal. As the balance shrinks the interest share falls and the principal share grows — slowly at first, then quickly near the end. On the example above, the first payment splits roughly $1,733 interest to $289 principal; by year 25 that ratio has flipped.

What one extra payment a year does

Because every dollar of extra principal removes all the future interest that dollar would have attracted, overpayments are unusually powerful early in a loan.

Strategy on the example loan	Term	Approx. interest saved
Pay as scheduled	30 yrs	—
Add $100 per month	≈ 26 yrs	≈ $58,000
Add $200 per month	≈ 23 yrs	≈ $99,000
One extra payment per year	≈ 25 yrs	≈ $86,000

Illustrative figures, rounded, assuming the rate holds and there is no early-repayment charge.

What this calculator does not include

Property tax and insurance. A US mortgage payment is usually quoted as PITI; this tool gives the P&I part only.
Arrangement, valuation and legal fees, which are often added to the balance.
Mortgage insurance (PMI) charged on smaller deposits until you cross an equity threshold.
Rate changes on variable, tracker or fixed-then-revert products.

Compare offers on APR rather than the headline rate: APR folds most compulsory fees into a single comparable number. And remember that a longer term always lowers the monthly figure while raising total cost — the two goals pull in opposite directions.

Loan calculator FAQ

How is a monthly loan payment calculated?

Using the amortization formula M = P × r × (1+r)^n ÷ ((1+r)^n − 1), where P is the principal, r the monthly interest rate and n the total number of monthly payments.

Does this include taxes and insurance?

No. It calculates principal and interest only. Property tax, home insurance and mortgage insurance are billed separately and can add substantially to a monthly housing payment.

Why is so much of my early payment interest?

Interest is charged on the outstanding balance, which is largest at the start. As the balance falls the interest portion shrinks and more of each fixed payment goes to principal.

Is it worth making extra payments?

Usually yes, and earlier is better. Extra principal removes all the future interest that amount would have accrued, so overpayments made in the first years of a loan save the most.

Should I choose a shorter or longer term?

A longer term lowers the monthly payment but increases total interest paid; a shorter term does the reverse. Choose the shortest term whose payment you can comfortably sustain.

What is the difference between interest rate and APR?

The interest rate prices the borrowing itself. APR also includes most compulsory fees, so it is the fairer number for comparing two offers.

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