How We Calculate
Every number on this site comes from a formula. This page documents the formulas, the assumptions, the data sources, and the limits of our calculators.
The payment formula
The standard amortization payment formula used on every fixed-rate calculator on this site:
M = P · r(1+r)^n / ((1+r)^n − 1)
Stated in words: payment = P × [r(1+r)^n] ÷ [(1+r)^n − 1], where the monthly rate r = annual interest rate ÷ 12. Here M is the monthly principal and interest payment, P is the loan amount (home price minus down payment), r is the monthly interest rate (annual rate ÷ 12), and n is the total number of monthly payments (loan term in years × 12).
A worked example, so you can check us by hand: a $300,000 loan at 6.5% for 30 years gives r = 6.5% ÷ 12 = 0.00541667 and n = 360. Raising (1 + r) to the 360th power gives 6.9918, so M = 300,000 × [0.00541667 × 6.9918] ÷ [6.9918 − 1] = $1,896.20 a month. That is the same arithmetic a servicing system runs when it builds your amortization table — we use double-precision floating point and round only for display.
For biweekly mode, we divide M by 2 (26 half-payments per year, equivalent to 13 full monthly payments). For ARM scenarios, we recompute M at each adjustment date using the new rate and the remaining n months on the original term.
Verification examples
We verify our calculators against independent implementations of the same formula — a spreadsheet calculation and a hand check using the equation above — before any change ships. The table below shows expected principal-and-interest payments for common scenarios. If you run the same loan, rate, and term through any of our fixed-rate calculators, the result should match to the cent.
| Loan amount | Interest rate | Term | Expected monthly P&I | Total interest |
|---|---|---|---|---|
| $300,000 | 6.50% | 30 years | $1,896.20 | $382,633 |
| $400,000 | 6.50% | 30 years | $2,528.27 | $510,178 |
| $500,000 | 7.00% | 30 years | $3,326.51 | $697,544 |
| $450,000 | 6.75% | 30 years | $2,918.69 | $600,729 |
| $250,000 | 5.50% | 15 years | $2,042.71 | $117,688 |
| $150,000 | 6.00% | 20 years | $1,074.65 | $107,915 |
Total interest equals the scheduled payments minus the principal: for the $400,000 row, 360 payments of $2,528.27 add up to $910,178, which is $510,178 of interest on a $400,000 loan. These figures cover principal and interest only; taxes, insurance, mortgage insurance, and HOA dues are added separately and are discussed below.
Assumptions built into our defaults
When you don't enter a value, we use these defaults. They are educated guesses, not commitments about your situation. Every one of them is an editable field — replace it with your own number and the result updates immediately.
| Field | Default | Why this value |
|---|---|---|
| Home price | $400,000 | Close to the US median sale price in 2024-2025. |
| Down payment | $80,000 (20%) | The conventional threshold above which PMI is not required. |
| Interest rate | 6.5% | In the range of conforming 30-year fixed rates observed in 2024-2026. Replace with your quoted rate for an accurate estimate. |
| Loan term | 30 years | The most common US conforming mortgage term. |
| Property tax | $3,500/year | Approximately 0.9% of the default home price, in line with the US effective property tax rate. |
| Homeowners insurance | $1,350/year | Close to the US national average for a standard homeowners policy on a mid-priced home. |
| HOA | $0 | Many homes are not in HOA communities. Set to $0 by default so totals are not inflated. |
| PMI (when triggered) | 0.5% of loan/year | Mid-range estimate. Actual PMI varies by credit score, LTV, and product; conventional PMI typically ranges from 0.3% to 1.5% annually. |
Where the numbers come from
- Interest rate defaults reflect public reporting of conforming 30-year fixed-rate averages. Every rate shown anywhere on this site is an illustrative example unless it is explicitly labeled as live data with a source. Replace it with your actual quote for accuracy.
- FHA MIP uses the published FHA schedule: 1.75% upfront plus an annual rate that varies by loan term and loan-to-value. Current values are sourced from HUD.
- VA funding fee uses the VA-published fee schedule, which varies by down payment, first-time vs subsequent use, and type of service.
- USDA guarantee fee uses the current annual rate published by USDA Rural Development.
- Property tax is user-supplied. Our default of about 0.9% of price is a national average, not a quote from your local assessor — rates vary widely by state and county, and levies, exemptions, and assessment caps are not modeled until you enter your own figure.
- Insurance is user-supplied. Our default is an industry-average estimate for a mid-priced home; actual premiums depend on coverage limits, deductible, age of the structure, and wind or flood zones.
- PMI and mortgage insurance use a mid-range annual rate applied to the original loan amount. Because real pricing depends on credit score, loan-to-value, and product, treat the figure as an order of magnitude and adjust it with the rate card your lender provides.
Rounding conventions
Inputs and intermediate results are held at full double-precision floating point; rounding happens only when a value is displayed. Payment figures are shown to the nearest cent, totals and interest sums to the nearest dollar, and percentages to two decimal places. Amortization schedules round the principal and interest columns independently for display, while the internal balance stays unrounded, so adding the visible column may differ from the running balance by a few cents. The final scheduled payment absorbs that residual so the balance lands on exactly zero. When you compare our output to a lender's amortization table, compare the payment line rather than mid-schedule rows, where rounding conventions differ from system to system.
How we handle one-time payments
One-time payments are applied directly to principal at the month you specify. They reduce the balance on which future interest is calculated. The amortization schedule recalculates the remaining payments at the original rate-and-term but on the new, lower balance — keeping the monthly payment constant and shortening the payoff date, OR shortening the term if you prefer.
Review and update schedule
Mortgage rates are highly market-driven and shift daily. Our calculator defaults are reviewed against conforming benchmarks on a quarterly basis. Program-specific fees (FHA MIP, VA funding fee, USDA guarantee fee) are updated within 30 days of any published change. Formulas are reviewed quarterly and any structural change is documented on this page. Content pages carry a visible review date so you can see when a guide was last checked. We do not attempt to track daily rate movements, because a static site cannot honestly claim to.
What our calculators do NOT do
- We do not run an underwriter's qualification model. We don't check credit score, DTI, employment history, or reserve requirements.
- We do not pull live tax records. Your actual property tax bill may differ significantly from our default.
- We do not return a Loan Estimate. We do not produce a Closing Disclosure. We are not a lender.
- We do not model state-specific closing costs. Use our Closing Cost Calculator with regional estimates for that.
- We do not give tax or legal advice. Consult a licensed professional before making decisions based on our results.
- We do not sell leads. Nothing you enter is sent to a lender, a broker, or a lead aggregator, and no one pays us for your contact details.
- We do not quote rates. Any rate displayed is an example, and we are not licensed to lock, quote, or originate anything.
- We do not rank lenders, and no lender pays for placement in our comparisons or guides.
Corrections policy
Found a calculation that looks wrong, or a default that has drifted from current market? Email [email protected] with the page URL, the inputs you entered, the result our calculator gave, and the result you expected from an independent source. We review every report and reproduce the case against a separate implementation of the formula before answering. Confirmed errors are fixed in the next build, and material corrections are noted on the affected page with the date of the change. Disagreements about assumptions rather than arithmetic are treated as a discussion: if you can document a better default, we will consider it for the next quarterly review.
Version and last updated date
This methodology page is version 2.0 and was last updated on September 8, 2026. Earlier revisions documented only the payment formula and the default table; rounding conventions, verification examples, and the corrections policy were added in the current version. Material changes to any formula will be listed here with the date they took effect, so you can tell whether a figure you saw last month was produced by the same logic you are looking at now.
Frequently asked questions
Is your payment formula the same one lenders use? Yes. Every fixed-rate calculator here uses the standard amortization formula that lenders, servicing systems, and spreadsheets use: payment = P × [r(1+r)^n] ÷ [(1+r)^n − 1], with r equal to the annual rate divided by 12 and n equal to the number of monthly payments. The differences you see in a lender quote come from the inputs — rate, points, mortgage insurance, taxes, and fees — not from the math.
Why does my lender's quote differ from your calculator? Usually because the inputs differ. Lenders price to your credit score, loan-to-value, property type, occupancy, and lock period, and their escrow estimate uses your actual tax bill and insurance premium rather than national averages. Enter the rate, taxes, and insurance from your Loan Estimate into our calculator and the payment should match to the cent.
Where do your default tax and insurance figures come from? They are national-scale approximations: property tax defaults to roughly 0.9% of the home price, in line with the US effective average, and homeowners insurance defaults to about $1,350 a year for a mid-priced home. Both are editable fields. Treat them as placeholders until you replace them with your county tax bill and an insurance quote.
Are the interest rates shown on this site live quotes? No. Rate figures are illustrative examples labeled for context, drawn from published conforming-rate reporting for the period shown. They are not quotes, not commitments to lend, and not predictions. Only a licensed lender working from your full profile can quote you a real rate.
Do you store or share the numbers I enter? No. Calculations run locally in your browser, so loan amount, price, rate, taxes, and insurance are never transmitted to our servers or sold to anyone. See our privacy policy for the full details on what is and is not collected.
How do I report a calculation that looks wrong? Email [email protected] with the page URL, the exact inputs you used, and the result you expected. We reproduce the case, compare it against an independent calculation, and publish a correction note on the affected page when the change is material.