How a mortgage payment is worked out
Each payment first covers the interest on what you still owe, and the rest pays down the loan. The balance is largest at the start, so early payments are mostly interest; by the end they're almost all principal. The payment that clears the loan exactly on time is:
M = P × i ÷ (1 − (1 + i)−n)
- P is the amount you borrow: the price minus your down payment, plus any insurance or fees added to the loan.
- i is the interest rate for one payment period: the yearly rate ÷ 12 for monthly payments, or ÷ 26 for payments every two weeks (Canada is different, see below).
- n is the number of payments: 360 for 30 years of monthly payments.
Property tax, home insurance, HOA or condo fees and PMI are added on top. They don't change how fast the loan is paid off.
Amortization schedule
The calculator doubles as a mortgage amortization calculator: open Amortization schedule under the results to see, for every year of the loan, how much of your payments went to principal and to interest and what you still owe. Tap a year to see each payment with its date. For a car, personal or other loan, the loan calculator gives the same schedule.
Worked example: $300,000 at 6.5% for 30 years
- A $375,000 home with 20% down ($75,000) leaves a loan of $300,000.
- i = 0.065 ÷ 12 = 0.0054167, and n = 30 × 12 = 360.
- (1 + i)360 = 6.9918, so M = $300,000 × 0.0054167 ÷ (1 − 1 ÷ 6.9918) = $1,896.20 a month.
- Over 360 payments you repay the $300,000 plus $382,633 of interest. In the first year $19,401 of your payments is interest and $3,353 is principal.
- Pay $200 a month extra and the loan is gone after 277 payments, 6 years 11 months sooner, saving $103,449.
Canada: interest compounded twice a year
Canada's Interest Act says a mortgage must state its rate “calculated yearly or half-yearly, not in advance”, so fixed-rate mortgages compound twice a year even though you pay monthly. The calculator converts the quoted rate r to a rate per payment with (1 + r/2)2/n − 1, where n is the number of payments a year.
At 5%, that's (1.025)1/6 − 1 = 0.4124% a month, slightly less than 5% ÷ 12 = 0.4167%. A $300,000 mortgage over 25 years costs $1,744.81 a month, compared with $1,753.77 with monthly compounding. This matches the Financial Consumer Agency of Canada's own example table to the cent. Variable-rate mortgages can compound differently, so check your mortgage contract.
US private mortgage insurance (PMI)
With a conventional loan and less than 20% down, you may have to pay PMI. Freddie Mac says it typically costs $30–$70 a month for every $100,000 borrowed, about 0.36%–0.84% of the loan a year. Enter the rate your lender quotes.
Under the Homeowners Protection Act, PMI ends automatically when your balance is scheduled to reach 78% of the home's original value, and at the latest the month after the loan's midpoint. You can ask to cancel it at 80%. For example, with 10% down on a $375,000 home at 6.5% and PMI of 0.5% a year, PMI adds $140.63 a month for 109 payments (into year 10), $15,328 in all. FHA and VA loans have their own rules.
CMHC mortgage loan insurance (Canada)
In Canada, a down payment under 20% needs mortgage loan insurance. The premium is a percentage of the loan, based on your down payment, and can be added to the mortgage (the calculator does this):
| Down payment | Premium | Over 25 years |
|---|---|---|
| 15% to 19.99% | 2.80% | 3.00% |
| 10% to 14.99% | 3.10% | 3.30% |
| 5% to 9.99% | 4.00% | 4.20% |
For example, 5% down on a $500,000 home leaves $475,000 to borrow; the 4.00% premium is $19,000, so the mortgage is $494,000. The minimum down payment is 5% of the first $500,000 and 10% of the rest; homes of $1.5 million or more need 20% down. With under 20% down, the longest amortization is 30 years for first-time buyers and new builds, and 25 years otherwise. In Ontario, Quebec and Saskatchewan, provincial sales tax on the premium is paid when you close.
UK: repayment or interest-only
Choose Mortgage type in the calculator. On £270,000 at 4.5% over 25 years, a repayment mortgage costs £1,500.75 a month and is cleared at the end. Interest-only costs £1,012.50 a month, but you still owe the full £270,000 after 25 years, so lenders will ask how you plan to repay it. Use the rate of your deal, not the APRC, and run the numbers again when a fixed rate ends.
Bi-weekly and accelerated payments
Paying every two weeks over the same term gives a payment a little under half the monthly one. Accelerated bi-weekly (or fortnightly) payments are exactly half the monthly payment, and because a year has 26 two-week periods, you make the equivalent of 13 monthly payments a year. On the $300,000 example, that clears the loan 5 years 10 months early and saves $88,122 in interest.
India: the same as an EMI
Indian home loans use the monthly reducing-balance method, so the monthly payment here is your EMI. For a quick EMI on any loan use the EMI calculator, and to see how much a bank may lend on your salary use the home loan eligibility calculator.
Tips before you apply
- Budget with your take-home pay, not your salary: see the US, UK or Canada tax calculators.
- Buying abroad or paid in another currency? Convert the price with the currency converter.
- Compare terms: a shorter one raises the payment but cuts the total interest sharply, and a bigger down payment lowers both.
- Ask your lender how much you can overpay each year without a charge.
Rules and examples checked on 1 October 2026 against the Interest Act, s.6, the FCAC's mortgage terms and amortization and down payment pages, CMHC's premium table, the CFPB on removing PMI, Freddie Mac on PMI costs and the CFPB's sample Loan Estimate, whose $761.78 payment the calculator reproduces. An estimate, not financial advice.