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Imagine, using the below mortgage calculator to evaluate different mortgage loan scenarios, some you've probably never thought of, in order to save a few thousand dollars.

Sounds useful, right?

That's precisely the aim of this web page — to provide you with the background and understanding to help you determine which mortgage is best for you.

Most consumers are painfully aware when shopping for a mortgage loan that they are about to make the biggest personal purchase of their life. According to the Mortgage Bankers Association (via housewire.com), the size of the average mortgage in the US hit an all-time high. As of March 2017, the typical loan size was $313,300.

Further, even at today's relatively low interest rates, the consumer will pay back nearly double the amount borrowed due to interest charges and fees. A borrower should welcome any techniques that can use to reduce these costs.

Continue reading below for some specific, money-saving tips on how you can use this calculator to make an informed financial decision....»

Need a traditional loan calculator?
Our Loan Calculator solves for one of four unknowns and creates a printable payment schedule as well as several charts.
Will making small, extra payments save me money?
Our Extra Payment Calculator will create an amortization table and show you the interest saved.
Enter a "0" (zero) for one unknown value above.
Enter a "0" (zero) for one unknown value above.

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You can use this calculator to answer such questions as:

  • How much mortgage can I afford?
  • What is the mortgage payment?
  • How much money do I need to buy a house?
  • What is the down payment on a house?

Two Tips for Saving Money on Your Mortgage

Mortgage payments are generally a significant portion of any family's monthly budget. Typically the mortgage loan consumes 25% or more of the monthly income. Hopefully, most consumers know if they make extra payments or agree to bi-weekly payments they can save a small boat load of interest over the term of their loan. Now, certainly these strategies are useful, and they will, in fact, save you money. Depending on your other investment options, they certainly should be considered.

But what if you don't have the free cash flow to make extra payments? Are there money saving strategies that don't require sacrifice?

Well yes, in fact, there are. Read on for two such ideas for you. Naturally, you'll want to plug your numbers into the calculator to see what you can save.

TIP 1: Don't Assume Making a Higher Down Payment Saves Money

Normally one would think that the larger the down payment amount, the less the amount borrowed. The lower loan amount means a lower accumulated interest charge over the term of the loan. That's what one would think, and usually, that would be correct. But at least in the US, mortgage borrowers have another option.

Borrowers can pay points. Points are nothing more than an up-front fee lenders charge in exchange for a lower interest rate. The lender will calculate the amount owed for points as a percentage of the total loan. On a $300,000 loan, 2.5 points equals $7,500.

So you're thinking, I understand what points are. And I do plan to be in this house for a dozen years or more. Also, it sounds good to pay something up front in exchange for a lower interest rate, but what if I don't have the available cash to pay points? Am I out of luck?

Maybe not.

How much cash do you have for a down payment? Twenty percent or more?

If that's the case, it may save you money if you give the lender less for a down payment and use that money to pay a couple of points. Let's look at an example.

In the calculator, enter the following values:

  • Price of Real Estate or Asset?:   $375,000.00
  • Down Payment Percent?:   22%
  • Mortgage Amount?:   $0
  • Number of Payments? (#):   360
  • Annual Interest Rate?:   4.1250%
  • Payment Amount?:   $0
  • Points?:  0.00%
  • Payment Frequency?:   Monthly

Since we are comparing mortgage strategies only, make sure "Annual Property Taxes?:", "Annual Insurance?:" and "Private Mortgage Ins. (PMI)?:" are all set to "0".

The calculator is going to calculate both the mortgage loan amount and the monthly payment since you have entered zeros for those inputs.

The truly important number, however, is total interest. Checking at the bottom of the calculator, just above the buttons, you'll see for our example loan that you would pay $217,836 in interest over the term of the loan. Make a note of this number. You'll need it for the next step.

There is one more calculation. Change the following inputs (the others are left as they are):

  • Down Payment Percent?:   20%
  • Mortgage Amount?:   $0  (Reset for new calculation)
  • Annual Interest Rate?:   3.8750%
  • Payment Amount?:   $0  (Reset for new calculation)
  • Points?:   2.00%

What we have done is reduce the down payment amount by 2% and added 2 points. When you add points, you are buying a lower interest rate. In this (conservative) example, adding 2 points lowers the fixed interest rate by 1/4 of a percent over the entire term of the loan. You may find in your area that you can reduce your rate more -- maybe by 0.333% or even 0.4%.

We are now ready to calculate the new mortgage details. This time, since all the important numbers are on the schedule, click "Payment Schedule." (It is not necessary to click "Calc.")

There are two totals in the summary section of the schedule we need to know:

  • Charges Due to Points: $6,000
  • Total Interest Due: $207,856.

They total $213,856.

Compare this to the total interest from the first calculation when the down payment was larger, and there were no points — $217,836.

The mortgage with the second set of features will save you $3,970.

Not only will you save nearly $4,000, but there's also icing on the cake (and it's calorie free!). The savings come to you without you having to make any sacrifices. You do not have to go through anything other than the typical mortgage approval process. You do not have to submit a different application or do additional paperwork. And you do not have to have any extra money up front.

The cool part is, if you look at your payment, your monthly payment will decrease from $1417 to $1410! Woopie!

There's even more...

If you are in the US and you itemize deductions when you pay income taxes, points are often a deductible cost for obtaining a mortgage. This means Uncle Sam (and other American taxpayers) is helping you out by lowering your tax bill. If you are in the 33% marginal tax bracket, $4,000 paid as mortgage points will save you $1,320 in taxes in the year you file after taking out the mortgage.

This is a win, win, win, win.

  • Lower total mortgage cost
  • Lower monthly payments
  • No change to the mortgage process itself
  • Front loading possible tax deduction

A word of caution is in order here. You'll only want to employ the second strategy if you plan to stay in your home for a relatively extended period. If you expect to move in say 5 or even ten years, you may not save enough in interest charges to make up for the points. Use the payment schedule to find your break-even point. I should also note one point that some may consider being a disadvantage. You'll have slightly less equity in your home in the early years of the mortgage. This is because you've traded points for additional down payment.

Let me know in the comments what you think of this tip. Will you consider using it?

I think my next tip is even better...

TIP 2: Make Payments at "Start-of-Period" to Save

Lenders hate this.

But if you are the borrower, you should love it.

When applying for a mortgage, lenders ask for a lot of documentation. One item they want to see are your bank account statements. They are looking at your cash flow to see if you have two or even more payments available beyond the down payment amount you have agreed to in the purchase contract.

All well and good.

Since the lender wants you to have a payment or two already in the bank, give it to them as early as possible. Often, the first loan installment is not due until the first of the month after the month following the closing. (Close on March 20th, and the payment is due on May 1st.) Instead of waiting though, hand the lender a check for the first payment on the day you sign the mortgage papers.

Why would I want to do that?

Here's why...

In the calculator, enter the following values:

  • Price of Real Estate or Asset?:   $350,000.00
  • Down Payment Percent?:   20%
  • Mortgage Amount?:   0
  • Number of Payments? (#):   360
  • Annual Interest Rate?:   4.1250%
  • Payment Amount?:   $1,417.60
  • Points?:  0.00%
  • Payment Frequency?:   Monthly
  • Payment Method?:   End-of-Period

Once again, since we are comparing only mortgage strategies, enter "0" for "Annual Property Taxes?:", "Annual Insurance?:" and "Private Mortgage Ins. (PMI)?:".

The calculator will solve for both the mortgage loan amount and the monthly payment since you've entered zeros for those inputs.

Click "Payment Schedule."

Make a note. Total interest due is $208,527, and the first payment is paid one month after the loan date. This is an "end-of-period" schedule.

Now for the comparison calculation....

Change the following inputs (the others are left as they are):

  • Mortgage Amount?:   $0  (Reset for new calculation)
  • Number of Payments? (#):   0  (Reset for new calculation)
  • Payment Method?:   Start-of-Period

These changes set the calculator to calculate the loan term.

Again, click "Payment Schedule."

Notice how the first payment now falls on the closing date of the loan? Also, notice for the first installment, there is NO INTEREST DUE. Why? Because no days have passed! Interest is charged/collected only for days when the money is on loan.

Now total interest due is $205,236.

By making this one simple change to the payment schedule, you will save $3,291 in interest charges over the term of the loan. Furthermore, you'll have to make only 258 payments, not 360 and the last payment will be due on February 1, 2047, not May 1, 2047.

Like the first tip, this tip does not require you to make any fundamental change to what you were already planning to do. In fact, you don't even have to tell your lender that you are going to do this. Just hand them the check on the day you close the loan.

If you decide to use this money saving strategy, understand the payment you provide your lender at closing is only a mortgage payment. You do not have to give them any escrow amount they might be collecting with later payments. Escrow is something separate. An escrow amount typically is added to the regular mortgage payment, and it is used to cover property taxes and insurance. Again, you pay them only the mortgage part of your total payment at the closing.

Also, it is a good idea to closely monitor your new mortgage account and confirm that this first payment is applied 100% to principal. If it's not, then you won't get the full benefit of this technique.

Now granted, saving $3,000 or $4,000 maybe doesn't seem like a lot on an obligation where the total payments are going to total close to half a million dollars and that are going to take you 30 years to pay back. But the point is, it is better to know about these loan strategies, and then you can use this mortgage calculator to see if your savings warrants you using one of both of them.

Do You Have 20 Seconds?
Please tell me how you use this calculator. Are you using it personally or professionally? What feature is important to you? If it didn't meet your needs, why? Your feedback will help me make improvements. Complete sentences aren't necessary! :)

17 thoughts on “mortgage-calculator

  1. Your columns are mixed up.
    The interest and the principal columns are wrong which is causing numbers to be incorrect.

  2. You’re referencing the print preview? The numbers aren’t wrong there. Using the default example, click on calc and then print preview. I see the following number for interest and principal for the first payment.

    1,516.67 interest
    922.43 principal

    The loan amount is $280,000 @ 6.5% interest rate.

    (6.5 / 100 / 12) * 280,000 = 1516.667

    Also, check the last running total of the principal column, the total equals the loan amount i.e $280,000.

    Or were you talking about something else?

  3. How can I enter the payment dates in the payment schedule?

    • If you want to enter payments as they are made (to determine exact loan balance or to handle extra or missed payments) then you can use this Time Value of Money Calculator . (This is a more flexible calculator but it will take time to learn. Please scroll to the bottom of the page for 25 tutorials.)

      If you just want to specify the loan’s origination date and first payment date and have the other payments on a regular schedule then you can use this amortization table, which I see you have already found.

  4. Why don’t the calculators auto-complete with the correct calculations once the required fills are filled in. It would lead to a much smoother user experience. Additionally, the errors that pop up when the calculator cannot calculate are vague, it would be helpful if they could pinpoint the exact source of error. Thank you!

    • Hi Rachel, so there are 2 questions / issues here. I’ll take the 2nd one first.

      As to the messages being vague, that should be very easy for me to fix. The problem is, they are not vague to me! Can you copy / paste here and tell me what isn’t clear and I’ll reword an update. I guess you keep seeing the message because they aren’t clear. The basic point to remember is, a user never types anything except for a number or the decimal character. And a user should use backspace to delete.

      As to the calculator auto calculating rather than clicking on the calculate button, that might be a future enhancement, but it’s tricky because many calculators can solve for multiple unknowns and there also does not need to be an unknown. Lets’s say a user wants to create a schedule with a specific payment amount which is not the normal payment amount and they want to have a term that results in a final larger balloon payment. Now they enter all their values and has they get to the payment amount, it has been calculated by the calculator because it previously had been 0. That means they have to clear out the just calculated value. That’s not ideal either.

      Probably the best thing is to let the user type Alt-C to calculate?

      Thanks for your comments and hope to hear what text you find not to be clear.

  5. In using the calculator, it seems that changing the accrual basis from 365 to 360 does not affect the payment amount which is incorrect. Not sure if this had been brought up before. Thanks

    • Hi, what calculator are you using? This calculator does not give the user an option for selecting a 360/365 day year.

      But, that aside, the 360/365 day option, where offered, only impacts calculations for “exact”, “daily” or “continuous” compounding OR when a period has odd days – say monthly frequency and dates go from Oct 7th to Nov. 1. Then you’ll see a difference due to 360/365 selection. The reason for this, if compounding is monthly and the period between the 2 dates is an even month, then the interest rate used is the nominal annual rate divided by 12 (not 360 or 365).

      You can check this for yourself using the Time Value of Money calculator.

      (Please do not reply to this email. If you have a follow-up, question, please post it on this site.)

      • I used the amortization calculator, although I accidentally added the comment under the mortgage calculator.

        I saw the statement impacts calculations for “exact”, “daily” or “continuous” compounding (when clicking settings to change the accrual basis) and even when I changed the option to compounding to daily from monthly, I could not see a difference in the payment.

        Terms are $100,000 at 5% for 60 months, note date 11/1/2016 with first payment 12/1/2016.

        We are in need of a loan calculator to calculate loan payments both on a 365 OR 360 accrual basis.

        Appreciate your help. Thank you!

        • I think I understand what’s happening. If you change between 360 or 365, you then need to go back and set the payment amount to 0, and recalculate it. The payment amount will not change on its own when the user changes the days per year option. Perhaps I need to think about making that change.

          Taking your numbers, I get these results:

          $1,887.51 for 365
          $1,890.70 for 360 days.

          Thanks for posting the follow-up.

          • Good morning- I went in and deleted the payment amount as you recommended and then calculated again but even like this I can’t get the payment amount to recalculate. I get a payment amount of $1887.12 for both 365 and 360. Any other suggestions? Thank you

          • This is perplexing. The calculator definitely will calculate different payment amounts based on 360/365 selection.

            Please confirm that compounding frequency is set to either “Daily” or “Exact/Simple”.

            Not really sure what you mean by “delete” the payment. Specifically, it has to be set to “0” (zero).

            If you reopen the settings dialog window, is your selection saved in every case? Meaning, when you select 360 and then reopen, do you see 360 selected? And same for the 365 selection. This setting is stored in a “cookie” on your local computer. Perhaps cookies are disabled? If they are, then it would not work either.

            Specifically what are all your inputes and what is the result of the calculated payment?

  6. ok, I think I got it. I corrected compounding from Monthly to Daily and made sure to set the payment to zero before changing the accrual basis. Thank you so much for your help.

  7. I have been looking for a calculator that told me the number of months it would take, and how much interest I would save, if I added money to every monthly mortgage payment.
    Your calculator takes into account exactly what I was looking for and gave me a figure in seconds.
    Brilliant!
    Thank you,
    Gail Hunt

  8. How do I change the date of the loan and the date of the payments?

    • With this calculator, the user can’t change the dates. The purpose of this calculator is to make it easy for a user to check total costs and affordability while making as few entries as possible.

      For being able to set dates, you have two choices.

      1. If you want to set the loan date and 1st payment date and then assume all payments are made on a fixed schedule, use the Amortization Schedule.

      2. If you want to record payments as they are made, that is, the payment dates vary, then use the Ultimate Financial Calculator.

      For #2, check out the tutorials on the page. Scroll down and read #25 (after reading #1), as that deals with random loan payments and calculating loan balances.

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