Most of a mortgage payment early on is interest. In the U.S. you can deduct interest on up to $750,000 of mortgage debt if you itemize, but the higher standard deduction means many homeowners no longer benefit.
How to use the Mortgage Interest Calculator
- Loan amount
- Interest rate
- Loan term
- Year of the loan
- Marginal tax rate
Results update as you type, and every field accepts the units shown in its menu.
How it works
Enter the loan amount, interest rate, term, the year to look at and your marginal tax rate.
Tips
- Compare loans by APR and total cost, not just the monthly payment.
- Extra payments go straight to principal and can save a lot of interest.
- Pay off the highest-rate debt first if you want to save the most money.
- Check for prepayment penalties before paying a loan off early.
Common mistakes to avoid
- Stretching a loan term to lower the payment without seeing the extra interest.
- Paying only the minimum on credit cards.
- Forgetting fees that are rolled into the loan.
Inputs explained
| Field | What to enter |
|---|---|
| Loan amount | Amount in your currency |
| Interest rate | In % |
| Loan term | In years |
| Year of the loan | A number |
| Marginal tax rate | In % |
What each result means
- Monthly payment = pmt([Interest rate]÷1200, [Loan term]×12, [Loan amount])
- Balance at the start of the year = max(bal([Loan amount], [Interest rate]÷1200, [Loan term]×12, (min([Year of the loan], [Loan term]) – 1)×12), 0)
- Balance at the end of the year = max(bal([Loan amount], [Interest rate]÷1200, [Loan term]×12, min([Year of the loan], [Loan term])×12), 0)
- Interest paid in that year = [Monthly payment]×12 – ([Balance at the start of the year] – [Balance at the end of the year])
- Interest paid up to the end of that year = [Monthly payment]×min([Year of the loan], [Loan term])×12 – ([Loan amount] – [Balance at the end of the year])
- Total interest over the loan = [Monthly payment]×[Loan term]×12 – [Loan amount]
- Potential tax saving that year (if itemizing) = [Interest paid in that year]×min(1, 750000÷[Loan amount])×[Marginal tax rate]÷100
Example values
How the main result changes when Loan amount changes and everything else stays at the example values above:
| Loan amount | Interest paid in that year |
|---|---|
| 175,000 | 11,317.41 |
| 262,500 | 16,976.11 |
| 350,000 | 22,634.82 |
| 437,500 | 28,293.52 |
| 525,000 | 33,952.23 |
| 700,000 | 45,269.64 |
Formula
Interest in year y = payments in year y − (balance at start of year − balance at end of year)Cumulative interest = payment × months − principal repaidTax saving ≈ interest × marginal rate (if you itemize)Worked example
Inputs — Loan amount: $350,000; Interest rate: 6.5 %; Loan term: 30 years; Year of the loan: 1; Marginal tax rate: 22 %.
Results — Monthly payment = $2,212.24; Balance at the start of the year = $350,000.00; Balance at the end of the year = $346,087.96; Interest paid in that year = $22,634.82; Interest paid up to the end of that year = $22,634.82; Total interest over the loan = $446,405.71; Potential tax saving that year (if itemizing) = $4,979.66.
Frequently asked questions
How much mortgage interest will I pay this year?
Payments in the year minus principal repaid – shown above.
Is mortgage interest tax-deductible?
Yes, on up to $750,000 of acquisition debt if you itemize.
When does the interest share fall?
Each year – the principal share grows as the balance shrinks.
What formula does the Mortgage Interest Calculator use?
Interest in year y = payments in year y − (balance at start of year − balance at end of year).