About

The 5% Mortgage Calculator is designed for a balanced market scenario. Historically, a 5% interest rate is often viewed as a neutral ground—higher than the crisis-era lows but significantly lower than the historical averages of the late 20th century. Calculating your potential payments at 5% helps establish a realistic baseline for home affordability in a stable economy.

At this rate, the cost of borrowing is moderate. While you pay more interest than at 3%, the monthly burden is often manageable for median-income households. This tool computes your Principal and Interest (P&I) and estimates escrow costs like taxes and insurance, giving you a comprehensive 'out-the-door' monthly housing expense.

Formulas

This calculator applies the standard actuarial method for fixed-rate mortgages at 5%.

Monthly Payment = Loan × 0.004167 × (1.004167)ⁿ / ((1.004167)ⁿ - 1)

Note: 0.004167 is the monthly decimal equivalent of 5% (0.05 / 12). The term n represents the total count of monthly payments.

Reference Data

Loan Amount	Term	Rate	Monthly P&I	Total Interest
$250,000	30 Years	5.0%	$1,342	$233,139
$350,000	30 Years	5.0%	$1,879	$326,395
$450,000	30 Years	5.0%	$2,416	$419,650
$250,000	15 Years	5.0%	$1,977	$105,857
$350,000	15 Years	5.0%	$2,768	$148,200

Frequently Asked Questions

Historically, yes. While higher than the pandemic-era lows, 5% is well below the long-term historical average of nearly 8%. It represents a healthy market equilibrium.

A 2% difference drastically changes affordability. For a $2,500 monthly budget, you could support a loan of roughly $465,000 at 5%, but only $375,000 at 7%.

At 5%, extra payments are very effective. Every dollar of extra principal paid early saves you from paying 5% compound interest on that amount for the remaining decades of the loan.