Custom Mortgage Calculator: Calculate Monthly Home Loan Payments

Mortgage payments typically make up the largest percentage of a homeowner’s monthly expenses. Whether you want to balance your budget before securing a mortgage rate or compare how different factors influence your payments, our custom mortgage calculator will help you determine monthly costs.

If you’re exploring how a home refinance could affect your monthly payments, check out our refinance calculator.

How to Calculate Mortgage Payments

To use the custom mortgage calculator, start by inputting all of your loan information. This can be real information from an existing mortgage or hypothetical values that you’re experimenting with. You can also add information about prepayments if you plan to make those.

If you’re unsure about a term, click the question marks in each row for more information. There’s also full descriptions for each term below the calculator.

With all your information added, the calculator will display your estimated monthly payment amount. It will also generate graphs to show principal and interest breakdowns, as well as principal balance over the loan term.

By clicking “View Report” at the top of the calculator, you can see a more detailed layout of all the facts and figures, additional summaries, payment schedules and printing options.

Principal vs. Interest Payments

If you’ve never taken out a home loan before, the differences between principal and interest payments may be new to you.

The principal is the original amount of money borrowed from a lender to buy a home, excluding interest. Payments towards the principal directly reduce the outstanding balance of the loan. As the principal balance decreases over time, you build equity in your property, which is the difference between the property’s value and what you owe on the mortgage.

On the other hand, interest is the cost of borrowing money, calculated as a percentage of the principal balance of the loan. Interest payments do not reduce the principal balance; instead, they are the lender’s charge for lending you the money. 

Fixed-rate mortgages are often structured so that the total monthly payment remains constant over the life of the loan, but the amount of principal and interest payments shift over time. In the early years of the loan, a larger portion of each payment goes toward interest. As your lender makes a return on the loan, the interest expense goes down, and more of each payment goes towards reducing the principal. 

By using the custom mortgage calculator, you can see a breakdown of how your overall debt will be split between primary and interest, as well as how much primary you will have left year by year. 

Note that if you have an adjustable-rate mortgage, your debt ratios will be slightly different and change over time. To experiment with that loan type, check out our adjustable-rate mortgage calculator

Factoring in Mortgage Prepayment

Mortgage prepayment refers to the act of paying off a mortgage loan before its due date. This can be done either by paying off the entire balance at once or by making extra payments in addition to the regular monthly payments. 

Prepaying a mortgage can reduce the amount of interest paid over the life of the loan, as it decreases the principal balance faster than scheduled, thereby reducing the interest calculated on the remaining principal. 

Be aware some mortgages may have prepayment penalties, which are fees charged by the lender for paying off the loan early. It’s important to understand the terms of your mortgage agreement before making extra payments.

The custom mortgage calculator allows you to visualize how mortgage prepayments will affect your interest debt. Input prepayment frequency and the amount you’ll pay, and the calculator will tell you how much you stand to save in interest. It will also compare your debt on the normal payment schedule to your debt with prepayments over the course of your loan term.