How to Use a Mortgage Payment Calculator

A mortgage payment calculator is a simple device for figuring the monthly cost of a mortgage using basic loan information.

Looking for something different? We've probably got you covered. Use our quick mortgage calculator guide to find the right tool for you.

We feature two mortgage payment calculators, one for fixed rate loans, the other for adjustable-rate mortgages. We've included more information on how to use the mortgage payment calculators (the ARM, in particular) below, or you can try the FRM calc here and the ARM calc here.

The fixed-rate mortgage payment calculator

This mortgage payment calculator is based on the simplest possible home loan plan. It does assume that interest is compounded monthly (which is standard on most mortgages).

You'll need to know:
  • your new home's purchase price
  • the size of your down payment
  • the loan term, in months (usually 180 or 360, for 15 or 30 years)
  • the interest rate for which you qualify, and
  • the mortgage's start date (this is used only for the amortization
  schedule)

The mortgage payment calculator returns your monthly costs, the total loan cost, the total interest bill, and a complete mortgage amortization schedule.

Easy enough. Try the mortgage payment calculator here, or, if you're considering an adjustable loan, continue for more information:

The adjustable-rate monthly payment mortgage calculator

To calculate monthly payments on an adjustable rate loan, you'll need all the same info that the fixed mortgage payment calculator uses, plus some:

  • the loan's lifetime rate cap
  • its initial rate cap
  • and the periodic rate cap
  • the length of the initial fixed period
  • and the length of each fixed rate period thereafter.

Here's what each of these mean:

Rate caps are actually pretty straightforward, and should be stated up front by every lender.

The lifetime cap is the highest maximum interest rate that could ever be applied to your mortgage. The initial rate cap is how much the rate is allowed to go up the first time it is adjusted. (Not all ARMs have this but most do.) The periodic rate cap is the amount the rate can increase on every adjustment period after the first one.

Now for the fixed periods. The initial fixed period is 12 months on a traditional ARM, but can be any multiple of 12 on "hybrid" ARMs. Initial fixed periods of 36, 60, and 84 months are all common.

The rate adjustment period thereafter expresses how often your rate will be adjusted for the rest of its life. This usually happens every 12 months, but it could be as frequently as every six or even fewer.

*It is very important to note that this adjustable-rate mortgage payment calculator computes the most expensive loan situation. That is, it assumes your rate will always increase to it's maximum possible value at any time. While this is a very safe way to plan, it may not give you completely accurate figures.

Click here to use the adjustable mortgage payment calculator. (Keep reading to find out how to correct for the mortgage payment calculator's worst-case assumption.)

More mortgage payment calculator tips

This mortgage payment calculator is intended for estimation purposes. Don't budget too tightly, and be sure and leave some wiggle room on loan amount and interest rate, especially if you haven't already been approved.

Consider applying for preapproval before you plan to closely. That way you can nail down an interest rate and use the mortgage payment calculator to design your loan around it.

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