📖 Overview
Use this tool to compare potential refinance monthly payment outcomes before applying.
⚙️ How It Works
This formula uses a standard fixed-rate amortization model over 360 months to estimate a stable monthly payment.
The Formula
M = P × [r(1+r)ⁿ] / [(1+r)ⁿ − 1]
| M | Monthly payment |
| P | Principal loan amount |
| r | Monthly interest rate = Annual rate ÷ 12 ÷ 100 |
| n | Total number of payments = 360 for a 30-year loan |
💡A 1% rate difference on a $400,000 loan changes your monthly payment by ~$235 and total interest paid over 30 years by ~$84,000.
Quick Reference
| Rate | $300k Loan / mo | $400k Loan / mo | $500k Loan / mo |
|---|---|---|---|
| 5.0% | $1,610 | $2,147 | $2,684 |
| 6.0% | $1,799 | $2,398 | $2,998 |
| 6.5% | $1,896 | $2,528 | $3,160 |
| 7.0% | $1,996 | $2,661 | $3,327 |
| 7.5% | $2,097 | $2,796 | $3,495 |
Practical Tips
💡 Run multiple rate scenarios before locking a mortgage.
💡 Keep total housing cost, not only principal and interest, in your budget.
💡 Use a conservative income assumption if your earnings vary.
Frequently Asked Questions
❓ Does this include taxes and insurance?
No. This estimate focuses on principal and interest only.
❓ Why does a small rate change matter?
On long terms like 30 years, rate shifts compound into large payment differences.