Free Finance Calculators
for Every Decision

How to Calculate Your Monthly Mortgage Payment (With Examples)

Understanding your mortgage payment before you speak to a lender puts you in a much stronger position. Your monthly mortgage payment is made up of four parts — principal, interest, taxes, and insurance (PITI). Our calculator handles the principal and interest portion, which is the core of every mortgage.

The formula behind every mortgage payment is: M = P[r(1+r)^n] / [(1+r)^n - 1] where P is your loan principal, r is your monthly interest rate (annual rate ÷ 12), and n is the total number of payments (years × 12).

Example: A $350,000 home with a $70,000 down payment leaves a $280,000 loan. At 6.5% interest over 30 years, your monthly payment is approximately $1,770. Over 30 years you will pay $637,200 total — meaning $357,200 goes purely to interest. This is why comparing 15-year vs 30-year terms matters so much.

Tips to lower your payment: A larger down payment reduces your principal. A shorter term increases monthly payments but saves dramatically on total interest. Even a 0.5% rate difference on a $300,000 loan saves over $30,000 in interest over 30 years. Always shop at least 3 lenders before committing.

→ Try our free Mortgage Calculator

Compound Interest Calculator — How Your Money Grows Over Time

Albert Einstein reportedly called compound interest "the eighth wonder of the world." Whether or not he said it, the maths is undeniable. Compound interest means you earn interest not just on your original investment, but on all the interest you have already earned — creating a snowball effect that grows faster the longer you wait.

The power of starting early: $10,000 invested at 7% annually for 30 years grows to approximately $76,123. Wait 10 years before starting and that same $10,000 at the same rate for only 20 years grows to just $38,697. Starting 10 years earlier more than doubles your outcome.

Compounding frequency matters: Daily compounding earns slightly more than monthly, which earns more than annual. On $10,000 at 7% for 20 years — annual compounding gives $38,697 while daily compounding gives $39,455. The difference grows with larger amounts and higher rates.

The Rule of 72: Divide 72 by your annual interest rate to find how many years it takes to double your money. At 6%, your money doubles every 12 years. At 9%, every 8 years. This quick mental maths helps you evaluate investments at a glance.

→ Try our free Compound Interest Calculator

Personal Loan Calculator: Total Cost Including Interest and Fees

The advertised interest rate on a personal loan is rarely the full picture. Origination fees, which typically range from 1% to 8% of the loan amount, are deducted upfront — meaning you receive less than you borrow but still repay the full amount. Always calculate the effective APR before accepting any loan offer.

Example comparison: Two lenders offer you a $15,000 loan over 3 years. Lender A charges 8% with a 2% origination fee. Lender B charges 9.5% with no fee. Lender A's monthly payment is $470 but the effective APR including the fee is closer to 10.8%. Lender B's payment is $477 at a true 9.5% APR. Lender B is actually cheaper over the life of the loan despite the higher headline rate.

What determines your rate: Credit score is the biggest factor — borrowers with 720+ scores typically qualify for rates below 10%. Payment history, debt-to-income ratio, loan term, and whether the loan is secured also affect your rate significantly.

Before you apply: Check your credit score for free, compare at least 3 lenders, use pre-qualification (soft credit check, no impact on score) to see estimates, and always calculate the full cost including fees before signing.

→ Try our free Loan Calculator

Take-Home Pay Calculator: What Is My Salary After Taxes?

Your gross salary and your actual take-home pay can differ by 25% to 40% depending on your income level, filing status, and deductions. Understanding the gap helps you budget accurately and negotiate salary offers more effectively.

What comes out of your paycheck (US federal):

• Federal income tax — based on your bracket (10% to 37% in 2024)
• Social Security — 6.2% on income up to $168,600
• Medicare — 1.45% on all income (plus 0.9% over $200,000)
• 401(k) contributions — pre-tax, reduces your taxable income
• Health insurance premiums — typically pre-tax through employer
• State income tax — varies by state (0% in Texas and Florida, up to 13.3% in California)

Example: A $65,000 salary for a single filer contributing 5% to 401k and paying $200/month in health insurance nets approximately $3,900/month after federal deductions — or about $46,800 annually. State taxes would reduce this further.

→ Try our free Salary Calculator

How Much Should I Save Each Month? A Simple Calculator

The right savings amount depends entirely on your goals, timeline, and current situation. However, several widely-accepted frameworks give you a starting point.

The 50/30/20 Rule: Allocate 50% of take-home pay to needs (rent, food, utilities), 30% to wants (entertainment, dining out), and 20% to savings and debt repayment. For someone taking home $4,000/month, that means saving $800/month.

For retirement specifically: Financial planners recommend saving 15% of gross income for retirement starting in your 20s. If you start in your 30s, aim for 20%. If you start in your 40s, 25-30% is needed to catch up. Time is the most valuable resource in retirement savings.

For specific goals: Work backwards. Want $20,000 for a home down payment in 3 years? You need to save approximately $556/month. Our savings calculator lets you model any goal — just set the target, timeframe, and interest rate, and it tells you the required monthly contribution.

Emergency fund first: Before investing, build 3–6 months of living expenses in a high-yield savings account. This prevents you from taking on debt or selling investments during unexpected events.

→ Try our free Savings Calculator

15-Year vs 30-Year Mortgage: Which Is Better?

This is one of the most common questions first-time homebuyers face — and the answer depends on your priorities. Both options have clear advantages and trade-offs.

The numbers on a $300,000 loan at 6.5%:

• 30-year: Monthly payment $1,896 — Total interest paid: $382,633
• 15-year: Monthly payment $2,613 — Total interest paid: $170,365
• Difference: $717 more per month saves you $212,268 in interest

Choose a 30-year if: You need lower monthly payments for cash flow flexibility, you plan to invest the payment difference (if your investment returns beat your mortgage rate), or your income is variable and you want a lower required payment.

Choose a 15-year if: You can comfortably afford the higher payment, you want to build equity faster, you are closer to retirement and want to be mortgage-free, or you prioritise the guaranteed interest savings over potential investment returns.

A middle path: Take a 30-year mortgage but make extra principal payments when possible. This gives you the flexibility of a lower required payment while paying down the loan faster when cash flow allows.

→ Compare both terms in our Mortgage Calculator

What Is a Good Debt-to-Income Ratio for a Mortgage?

Your debt-to-income (DTI) ratio is one of the most important numbers lenders look at when evaluating your mortgage application. It measures how much of your gross monthly income goes toward debt payments.

How to calculate your DTI: Add up all your monthly debt payments (mortgage, car loan, student loans, credit card minimums, personal loans) and divide by your gross monthly income. Multiply by 100 for a percentage.

Example: You earn $6,000/month gross. Your debts are: proposed mortgage $1,500 + car loan $400 + student loan $300 = $2,200. DTI = $2,200 ÷ $6,000 = 36.7%.

DTI benchmarks lenders use:

• Below 36% — Excellent. Most lenders will approve you easily
• 36% to 43% — Good. Conventional loans typically approve up to 43%
• 43% to 50% — Risky. Some FHA loans allow up to 50% with compensating factors
• Above 50% — Very difficult to get approved by most lenders

How to improve your DTI: Pay down existing debt before applying, avoid taking on new debt, increase your income, or make a larger down payment to reduce your mortgage amount.

→ Calculate your potential mortgage payment

How Much House Can I Afford on a $70,000 Salary?

The most commonly used rule is that your home should cost no more than 2.5 to 3 times your annual gross salary. On a $70,000 salary, that suggests a home price of $175,000 to $210,000. However, this is a rough guide — your actual affordability depends on several factors.

The 28% rule: Your monthly mortgage payment (principal + interest + taxes + insurance) should not exceed 28% of your gross monthly income. On $70,000/year ($5,833/month), that means a maximum payment of $1,633/month.

What $1,633/month buys at current rates: At 6.5% for 30 years with a 10% down payment, a $1,633/month payment corresponds to a loan of approximately $258,000 — meaning a home price of roughly $287,000.

Factors that change this: Your credit score (higher scores unlock lower rates), existing debt (higher DTI reduces what lenders will approve), down payment size (20% eliminates PMI, saving $100–200/month), and location (property taxes vary dramatically by state and county).

The bottom line: Run your specific numbers before trusting any rule of thumb. Enter your target home price, your expected down payment, and current interest rates into our mortgage calculator to see your exact monthly payment.

→ Find out what you can afford with our Mortgage Calculator