Mortgage Interest Calculator

Understanding Cumulative Mortgage Interest

Over the life of a typical 30-year home loan, homeowners often pay more in total interest than the original purchase price of the home. In the early years of a conventional fixed-rate mortgage, the majority of your monthly payment goes directly toward paying interest rather than reducing the principal balance.

How Mortgage Interest Compounding Works

Mortgage interest is calculated monthly based on the remaining principal balance. The monthly interest payment is given by:

$$I_{\text{monthly}} = \text{Principal Balance} \times \frac{\text{Annual Interest Rate}}{12}$$

The total interest paid over the loan term $n$ months is:

$$\text{Total Interest} = (M \times n) - P$$

Tax Deductibility of Mortgage Interest

In many jurisdictions, itemizing homeowners can deduct mortgage interest from their taxable income. Under US tax law, interest on up to $750,000 of mortgage debt for a primary residence is generally tax-deductible for taxpayers who itemize deductions on Schedule A.

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