How to Use a Mortgage Calculator — Step-by-Step Guide

Learn how to calculate monthly mortgage payments, understand amortisation, and factor in PMI and taxes. Everything you need before making an offer.

Step 1: Enter the home price
Enter the purchase price of the property you're buying or considering.
Step 2: Set your down payment
Enter the amount or percentage you'll pay upfront. A down payment of 20% or more eliminates PMI (Private Mortgage Insurance). Lower down payments mean PMI is added to your monthly cost.
Step 3: Enter the loan term
Choose 15, 20, or 30 years. A 15-year mortgage has higher monthly payments but significantly less total interest. A 30-year mortgage has lower monthly payments but costs much more over time.
Step 4: Enter the annual interest rate
Enter your quoted mortgage rate. Even a 0.5% difference on a large loan changes your payment by hundreds of dollars per month and tens of thousands over the loan's life.
Step 5: Add property tax, insurance, and PMI (optional)
For a complete picture of your monthly housing cost, add annual property tax, homeowner's insurance, and PMI rate (typically 0.5–1.5% of the loan amount annually if applicable).
Step 6: Review your monthly payment breakdown
The calculator shows total monthly payment, split into principal, interest, tax, insurance, and PMI. This is your true all-in housing cost.
Step 7: View the full amortisation schedule
The schedule shows exactly how much of each payment goes to principal vs interest over every year of the loan. Notice how the early years are mostly interest — this is why making extra principal payments early has such a big impact.