How your mortgage payment works
Your monthly payment repays the loan amount — the home price minus your down payment — plus interest, spread evenly over the loan term. This is called amortization: in the early years most of each payment is interest, and over time more goes toward the actual balance.
Note: this shows principal and interest only. Your real bill may also include property tax, home insurance, and (in some places) other fees.
Ways to pay less overall
- A larger down payment shrinks the loan and the total interest.
- A shorter term (e.g. 15 vs 30 years) raises the monthly payment but saves a lot of interest.
- Even 0.5% lower interest can save a surprising amount over decades — shop around.