What this U.S. mortgage estimate means
The calculator estimates the monthly principal-and-interest payment for a fully amortizing fixed-rate loan. It divides the entered annual rate into monthly periods and assumes that rate remains unchanged for the entire term.
Payment is not total housing cost
A lender's projected monthly payment can also include property taxes, homeowners insurance, and mortgage insurance through escrow. Condominium or homeowners-association dues may be paid separately. The Consumer Financial Protection Bureau recommends checking the Loan Estimate's projected payments and estimated cash to close rather than comparing principal and interest alone.
For a useful scenario, enter the loan amount after the down payment, not the home's purchase price. Compare the calculator's principal-and-interest figure with the same line on lender estimates. Then add local tax, insurance, mortgage insurance, association dues, utilities and a maintenance allowance to build a household budget.
Fixed-rate assumptions and limitations
This model does not calculate adjustable-rate changes, discount points, lender credits, closing costs, temporary buydowns, balloon payments or prepayment. Its total interest assumes every scheduled payment is made and the loan is kept for the full term.
Frequently asked questions
Why is a lender's monthly total higher?
Taxes, insurance, mortgage insurance and escrow items may be added to principal and interest.
Does a lower payment mean a cheaper loan?
Not necessarily. A longer term can reduce the monthly payment while increasing total interest, and upfront points or fees can change the comparison.
Does this replace a Loan Estimate?
No. Use the standardized lender document for rate, costs, cash to close and payment details.