Mortgage Rate Calculator

We created this mortgage rate calculator to help you estimate the adjusted rate of your mortgage or APR, which includes applicable fees and expected changes in the applied mortgage rate.

You can also learn other essential mortgage metrics, such as the estimated interest amount and monthly payments.

Foremost, the mortgage interest rate calculator estimates for you the annual percentage rate (APR), which reflects the overall cost of your mortgage expressed in a yearly mortgage rate. It is a more comprehensive way to measure the cost compared to the applied mortgage rate, as it incorporates the applicable fees. Moreover, it also considers the expected fluctuations in the mortgage rate when you take an ARM mortgage.

Continue reading to learn:

• How to calculate your monthly mortgage payment;
• How to calculate mortgage interest rate; and
• Why are mortgage rates going up.

You can easily employ our mortgage rate calculator by setting up the following parameters.

1. Main specifications

• Loan balance — The amount of your mortgage;

• Mortgage term — The remaining or original mortgage term;

• Mortgage rate — Annual interest rate here;

• Mortgage type — You can use our tool for both fixed and adjustable rate mortgages (ARM).

• Compounding frequency — How the lender computes interest on the principal;

If you choose a type other than a fixed-rate mortgage, the following additional options will appear, which apply to an adjustable-rate mortgage (ARM).

• Adjustments by:

  • Manual setup — Apply here the interest rate adjustment to be expected in the given adjustment frequency and the interest cap/floor; and

  • Trend — Set here the expected interest rate at the last period to let the interest rates be computed automatically in each period.

• First adjustment after (customized) — Set the term for keeping the initial interest fixed; and

• Periods between adjustments — Choose the frequency for potential interest rate adjustments.

2. Mortgage fees

After providing the main features of your mortgage, you can add the applicable fees, which can affect the final cost of your mortgage.

• Mortgage points — An upfront fee as a percentage of the mortgage loan — learn more about it by our mortgage points calculator;
• Up-front fee — The upfront fee paid on the mortgage; and
• Annual fee — The yearly mortgage cost to be paid monthly (spread over the year).

Once the parameters are set, the results will be calculated and displayed instantly.

In the Results section, you’ll find key mortgage insights, including:

• The annual percentage rate, or APR, which is the cost of your loan as a yearly mortgage rate. It is a more comprehensive measure of the cost than the interest rate, as it incorporates not only the interest rate but also emerging fees. Besides, it also accounts for the expected fluctuations in the applicable interest rate when you take an ARM.

• Monthly payment.

• Paid interest.

• Total payments.

Now, go ahead and give our mortgage rate calculator a try.

Calculating your mortgage rate requires estimating the exponential base of the specific equation. When the equation takes a complex form, one efficient way to deal with such a problem is to apply the so-called Newton-Raphson method, which is a mathematical algorithm that involves an iteration process.

MP = P[r(1+r)ⁿ / (1+r)ⁿ-1]

where:

• MP — Monthly payment, including any fees;
• P — Loan amount;
• r — Monthly interest rate; and
• n — Repayment period in months.

Central banks generally attempt to adjust interest rates when the inflation rate doesn't meet its target. When the inflation rate is high, this adjustment aims to reduce aggregate demand, which can be achieved prominently through the banking sector.

Higher mortgage rates deter households from taking mortgages and, therefore, buying houses. Lower demand may contribute to lower inflationary pressure through multiple channels, such as lower housing investments. However, it remains uncertain how high mortgage rates will go.

When planning to buy a home, the first step is figuring out how much you can afford. A helpful guideline is the 28/36 rule — no more than 28% of your gross income should go toward housing costs, and no more than 36% toward all debt combined.

Another major factor is your down payment. A larger down payment can lower your monthly mortgage payment, help you secure a better interest rate, and even eliminate the need for private mortgage insurance (PMI).

While many buyers aim for 20% down, options exist for as little as 3%, especially with government-backed loans. If saving for a big down payment is tough, don’t worry — there are various down payment assistance programs available, especially if you're from the US. Programs like America’s Home Grant® and Fannie Mae’s resources can offer grants, low-interest loans, or gifts to help cover down payments and closing costs.

Choosing the correct type of mortgage is just as important as choosing the right home. Here’s what you need to know:

• Fixed-rate mortgages offer stable, predictable monthly payments over the life of the loan.
• Adjustable-rate mortgages (ARMs) usually start with a lower rate but can increase later based on market trends.

No matter which type you choose, your loan will follow an amortization schedule, meaning each monthly payment is split between paying off interest and reducing the loan principal.

Besides the loan itself, remember to budget for additional costs, such as:

• Private Mortgage Insurance (PMI) — if you're from the US and your down payment is under 20%;
• Homeowners Association (HOA) fees — in certain neighborhoods;
• Homeowners insurance;
• Property taxes; and
• Closing costs when buying the home.

Finally, there are different types of loans for different needs:

• Conventional loans — great for buyers with strong credit;
• FHA loans — for those needing low down payments;
• VA loans — for veterans and active-duty service members;
• USDA loans — for buyers in rural areas; and
• Jumbo loans — for high-priced properties.

You should consider the mortgage interest rate calculator as a model for financial approximation. All payment figures, balances, and interest figures are estimates based on the data you provided in the specifications and are not exhaustive, despite our best efforts.

For this reason, we created the calculator for instructional purposes only. Still, if you encounter a relevant drawback or inaccuracy, we are always pleased to receive useful feedback and advice.