How we calculate
No black boxes. Here is exactly how every figure on this site is worked out, and where the numbers come from — so you can check our work.
Where our interest rates come from
We show live national average rates, fetched on our server once a day and cached (with a last-known-good fallback so a source outage never breaks the calculator):
- United States — the Federal Reserve's FRED 30-year (MORTGAGE30US) and 15-year (MORTGAGE15US) fixed series.
- Canada — the Bank of Canada Valet API — 1-, 3-, and 5-year fixed rates, plus prime.
Interest rates are national— they're set by capital markets, not by your state or province. What genuinely varies by region is property tax and insurance (below). The date you see in the “rates last updated” stamp is the source's own observation date. You can always type your own rate to override ours.
The monthly payment formula
Principal & interest uses the standard amortization formula — the same one lenders use:
- M— the monthly principal & interest payment
- P — the loan amount (home price − down payment)
- r — the periodic (monthly) interest rate
- n — the number of monthly payments (years × 12)
US vs. Canadian compounding
The one real subtlety is how interest compounds — and it's different by country, which many calculators get wrong:
- United States — interest compounds monthly, so the monthly rate is simply annual ÷ 12.
- Canada — by law, fixed mortgages compound semi-annually, not monthly. So the effective monthly rate is (1 + annual ÷ 2)1/6 − 1. This makes a Canadian payment slightly lower than a naïve monthly-compounding estimate at the same posted rate.
In Canada the term (1/3/5-year) is how long your rate is locked, while the amortization (e.g. 25 years) is how long it takes to pay off. We calculate the payment over the full amortization at the current rate; your rate would actually reset at each renewal.
Property tax & insurance
These are the figures that vary by region, so we estimate them from regional averages as a percentage of the home's value, then divide into a monthly amount:
US property-tax figures track Tax Foundation effective-rate rankings; Canadian figures use typical municipal-average effective rates. Insurance is an approximate average premium. These are estimates for planning, not official quotes — your actual amounts depend on your county/municipality, insurer, and the specific property.
Total monthly payment
Your total is simply the three lines of the ledger added up:
An extra monthly payment(under Advanced) is applied straight to principal each month; we re-run the schedule to show the interest and time it saves. Total interest over the loan is the sum of every month's interest portion.
Affordability & refinance
- The affordability tool works backward from income: it caps total housing cost at your chosen debt-to-income ratio (after existing debts), then solves for the most expensive home that fits.
- The refinance tool amortizes your remaining balance over the years left at your current rate, compares it to a new rate/term, and finds the break-even point on closing costs.
Everything here is an estimate to help you plan — not financial advice or a loan offer. For exact figures, ask a lender for an official Loan Estimate. See our Privacy Policy.