How to Calculate Your Monthly Mortgage Payment in the US

## How US mortgages work In the US, home loans are called **mortgages**. The most common is the **30-year fixed-rate mortgage**, where your monthly payment stays the same for 30 years. **Current rates (2025):** 30-year fixed rates are typically 6.5%–7.5% depending on your credit score and the lender. ## The real cost: PMI If your down payment is less than 20% of the home price, you'll likely pay **PMI** (Private Mortgage Insurance) — usually 0.5%–1.5% of the loan amount per year, added to your monthly payment. On a $400,000 loan, PMI could add $167–$500/month until you reach 20% equity. ## 15-year vs 30-year - **30-year mortgage:** Lower monthly payment, much more total interest - **15-year mortgage:** Higher payment (~40% more), roughly half the total interest On a $400,000 loan at 7%: - 30 years: ~$2,661/month, ~$558,000 total interest - 15 years: ~$3,595/month, ~$247,000 total interest The 15-year saves $311,000 in interest but costs $934 more per month. ## Points and closing costs You can pay "discount points" upfront (1 point = 1% of loan amount) to get a lower rate. Each point typically lowers your rate by 0.25%. This only makes sense if you plan to stay in the home long-term.