How Much Interest Will I Pay?

How much interest you will pay over the life of your mortgage depends on four key factors.
The type of loan

Finding a mortgage can be a strenuous process. Not only are there hundreds of institutions offering mortgages, it can seem as though there are dozens of different types of mortgages themselves. Different interest rates, different lengths and other features can be confusing.

As you shop your options, keep two thoughts in mind:
  1. How long do you expect to live in the home?
  2. What is your tolerance for monthly payments increasing?

Knowing the answers to these questions makes it easier to see the benefits and drawbacks of each type. Click for a comparison of fixed versus variable rate mortgages.

The interest rate
Each monthly payment is comprised of interest and principal. Early on, most of your payment goes toward interest, and toward the end of the life of the mortgage, most of your payment goes toward principal, so most of the mortgage pay down comes late in the mortgage period.


Your monthly payment amount

Your mortgage payment is determined by your loan amount, term and interest rate, and a mortgage calculator like ours that factors all three into the calculation can provide a good estimate of what yours will be.

Remember, though, to have a true idea of what your complete monthly housing costs will be, you need to account for other common expenses. Your mortgage payment will be the largest, but utilities and insurance, to name a couple, will add to it. 

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The term of your loan

Most institutions offer fixed rate mortgages of 30 years and 15 years. Generally speaking, the longer your loan, the more you’ll pay in interest. This is why some borrowers choose a shorter loan term.

As our chart demonstrates, your monthly payment will be higher because you’re cutting in half the length of time you have to repay the principal, but you’re also being charged interest half as many times as a 30-year mortgage. 


15 Year Mortgage  30 Year Mortgage
Mortgage Amount $100,000 $100,000
Interest Rate 3.75% 4.75%
Monthly Payments $727.22 $521.65
Total monthly payments over
the term of the mortgage
$130,900 $187,791
Total principal paid over the
term of the mortgage
$100,000 $100,000
Total interest paid over the
term of the mortgage
$30,900 $87,791

What Should I Put Down?

Avoid PMI with at least 20%.

More About Mortgages

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