{"id":95907,"date":"2025-12-30T09:41:44","date_gmt":"2025-12-30T17:41:44","guid":{"rendered":"https:\/\/www.redfin.com\/blog\/?p=95907"},"modified":"2025-12-30T09:41:20","modified_gmt":"2025-12-30T17:41:20","slug":"how-does-mortgage-interest-work","status":"publish","type":"post","link":"https:\/\/www.redfin.com\/blog\/how-does-mortgage-interest-work\/","title":{"rendered":"How Does Mortgage Interest Work?"},"content":{"rendered":"<p><a href=\"https:\/\/www.rocketmortgage.com\/calculators\/amortization-calculator\" data-wpel-link=\"external\" target=\"_blank\" rel=\"external noopener noreferrer\"><span style=\"font-weight: 400;\">Mortgage interest<\/span><\/a><span style=\"font-weight: 400;\"> is the cost you pay to borrow money to <\/span><a href=\"https:\/\/www.redfin.com\/\" data-wpel-link=\"exclude\"><span style=\"font-weight: 400;\">buy a home<\/span><\/a><span style=\"font-weight: 400;\">. It\u2019s calculated as a percentage of your loan balance and makes up a large portion of your monthly payment\u2014especially in the early years of your mortgage. Over time, as you pay down what you owe, the amount of interest you pay each month gradually decreases.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">In this Redfin article, we\u2019ll break down mortgage interest in plain language, including:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">What mortgage interest is and where it shows up in your payment<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">How principal, interest, and amortization work together<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Why early payments are interest-heavy<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">How to read an amortization schedule to understand long-term costs<\/span><\/li>\n<\/ul>\n<h2><span style=\"font-weight: 400;\">Mortgage interest basics: principal, interest, and amortization<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">When you make a <\/span><a href=\"https:\/\/www.rocketmortgage.com\/calculators\/mortgage-calculator\" data-wpel-link=\"external\" target=\"_blank\" rel=\"external noopener noreferrer\"><span style=\"font-weight: 400;\">mortgage payment<\/span><\/a><span style=\"font-weight: 400;\">, your money is split between two main components: principal and interest. How those amounts are divided each month is determined by amortization.<\/span><\/p>\n<p><b>Think of it like this:<\/b><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Principal<\/b><span style=\"font-weight: 400;\"> \u2013 The amount you borrowed to buy the home<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Interest<\/b><span style=\"font-weight: 400;\"> \u2013 The fee the lender charges for lending you that money<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Amortization<\/b><span style=\"font-weight: 400;\"> \u2013 The schedule that determines how your loan balance is paid down over time through fixed monthly payments<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">At the start of your loan, a larger share of your payment goes toward interest. As the principal balance shrinks, more of each payment goes toward paying down the loan itself.<\/span><\/p>\n<p><b>Mini amortization example (30-year loan, fixed rate):<\/b><\/p>\n<table>\n<tbody>\n<tr>\n<td><b>Payment<\/b><\/td>\n<td><b>Total Payment<\/b><\/td>\n<td><b>Interest<\/b><\/td>\n<td><b>Principal<\/b><\/td>\n<td><b>Remaining Balance<\/b><\/td>\n<\/tr>\n<tr>\n<td><b>1<\/b><\/td>\n<td><span style=\"font-weight: 400;\">$1,500<\/span><\/td>\n<td><span style=\"font-weight: 400;\">$1,200<\/span><\/td>\n<td><span style=\"font-weight: 400;\">$300<\/span><\/td>\n<td><span style=\"font-weight: 400;\">$299,700<\/span><\/td>\n<\/tr>\n<tr>\n<td><b>12<\/b><\/td>\n<td><span style=\"font-weight: 400;\">$1,500<\/span><\/td>\n<td><span style=\"font-weight: 400;\">$1,150<\/span><\/td>\n<td><span style=\"font-weight: 400;\">$350<\/span><\/td>\n<td><span style=\"font-weight: 400;\">$295,800<\/span><\/td>\n<\/tr>\n<tr>\n<td><b>60<\/b><\/td>\n<td><span style=\"font-weight: 400;\">$1,500<\/span><\/td>\n<td><span style=\"font-weight: 400;\">$1,000<\/span><\/td>\n<td><span style=\"font-weight: 400;\">$500<\/span><\/td>\n<td><span style=\"font-weight: 400;\">$272,000<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p><span style=\"font-weight: 400;\">This gradual shift is the core of how mortgage interest works.<\/span><\/p>\n<h3><span style=\"font-weight: 400;\">What mortgage interest is and how it shows up in your payment<\/span><\/h3>\n<p><span style=\"font-weight: 400;\">Mortgage interest is essentially the price you pay for access to borrowed money. Lenders charge interest to offset risk and earn a return over the life of the loan.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">In a typical <\/span><a href=\"https:\/\/www.redfin.com\/mortgage-calculator\" data-wpel-link=\"exclude\"><span style=\"font-weight: 400;\">monthly mortgage payment<\/span><\/a><span style=\"font-weight: 400;\">, interest appears alongside other housing costs:<\/span><\/p>\n<p><b>Sample monthly payment breakdown:<\/b><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Principal:<\/b><span style=\"font-weight: 400;\"> Pays down your loan balance<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Interest:<\/b><span style=\"font-weight: 400;\"> Cost of borrowing the money<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Property taxes:<\/b><span style=\"font-weight: 400;\"> Collected monthly and paid to your local government<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Homeowners insurance:<\/b><span style=\"font-weight: 400;\"> Protects the home against damage<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">(These four parts are often referred to as <\/span><b>PITI<\/b><span style=\"font-weight: 400;\">.)<\/span><\/p>\n<p><span style=\"font-weight: 400;\">While taxes and insurance may change over time, your interest portion follows a predictable pattern based on your loan balance and rate.<\/span><\/p>\n<h3><span style=\"font-weight: 400;\">How amortization changes your interest vs. principal over time<\/span><\/h3>\n<p><span style=\"font-weight: 400;\">Amortization explains why mortgage interest feels so expensive in the beginning. Since interest is calculated based on your remaining loan balance, a higher balance means higher interest charges.<\/span><\/p>\n<p><b>Early years:<\/b><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Most of your payment goes toward interest<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Principal reduction is slow<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Loan balance decreases gradually<\/span><\/li>\n<\/ul>\n<p><b>Later years:<\/b><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Interest charges drop as the balance shrinks<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">More of each payment goes toward principal<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Equity builds faster<\/span><\/li>\n<\/ul>\n<p><b>Mini schedule snapshot:<\/b><\/p>\n<table>\n<tbody>\n<tr>\n<td><b>Year<\/b><\/td>\n<td><b>Interest Paid<\/b><\/td>\n<td><b>Principal Paid<\/b><\/td>\n<\/tr>\n<tr>\n<td><b>1<\/b><\/td>\n<td><span style=\"font-weight: 400;\">High<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Low<\/span><\/td>\n<\/tr>\n<tr>\n<td><b>10<\/b><\/td>\n<td><span style=\"font-weight: 400;\">Moderate<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Moderate<\/span><\/td>\n<\/tr>\n<tr>\n<td><b>25<\/b><\/td>\n<td><span style=\"font-weight: 400;\">Low<\/span><\/td>\n<td><span style=\"font-weight: 400;\">High<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p><span style=\"font-weight: 400;\">This structure is normal and built into fixed-payment mortgages.<\/span><\/p>\n<h3><span style=\"font-weight: 400;\">Understanding your amortization schedule<\/span><\/h3>\n<p><span style=\"font-weight: 400;\">An amortization schedule is a table that shows exactly how each payment is applied over the life of your loan. It\u2019s one of the best tools for understanding how much interest you\u2019ll pay long-term.<\/span><\/p>\n<p><b>What an amortization table shows:<\/b><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Payment number<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Total monthly payment<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Amount going to interest<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Amount going to principal<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Remaining loan balance<\/span><\/li>\n<\/ul>\n<p><b>How to read it (step-by-step):<\/b><\/p>\n<ol>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Look at the <\/span><b>first few rows<\/b><span style=\"font-weight: 400;\"> to see how interest dominates early payments.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Scan the <\/span><b>middle years<\/b><span style=\"font-weight: 400;\"> to see where principal and interest are closer to even.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Review the <\/span><b>final payments<\/b><span style=\"font-weight: 400;\"> to understand how little interest remains near payoff.<\/span><\/li>\n<\/ol>\n<p><span style=\"font-weight: 400;\">Using an amortization schedule can also help you evaluate strategies like <\/span><a href=\"https:\/\/www.redfin.com\/blog\/can-you-pay-off-your-mortgage-early\/\" data-wpel-link=\"exclude\"><span style=\"font-weight: 400;\">making extra payments<\/span><\/a><span style=\"font-weight: 400;\"> or <\/span><a href=\"https:\/\/www.redfin.com\/blog\/when-to-refinance-mortgage\/\" data-wpel-link=\"exclude\"><span style=\"font-weight: 400;\">refinancing<\/span><\/a><span style=\"font-weight: 400;\">, since you can see how reducing the balance earlier affects total interest paid.<\/span><\/p>\n<h2><span style=\"font-weight: 400;\">How mortgage interest is calculated<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Mortgage interest is calculated based on three main factors: your remaining loan balance, your interest rate, and how often interest accrues. Each month, lenders apply your interest rate to the unpaid balance of your loan, then add that interest charge to your payment breakdown.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Here\u2019s what influences how much interest you pay each month:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Your current loan balance (higher balance = more interest)<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Your annual interest rate<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Whether interest accrues daily or monthly<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">When your payment is applied during the month<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Below, we\u2019ll walk through the math step by step and show real-world examples.<\/span><\/p>\n<h3><span style=\"font-weight: 400;\">Step-by-step formula for monthly mortgage interest<\/span><\/h3>\n<p><span style=\"font-weight: 400;\">Most mortgages use a straightforward calculation to determine monthly interest.<\/span><\/p>\n<p><b>Monthly interest formula (plain text): <\/b><b><br \/>\n<\/b><span style=\"font-weight: 400;\">Remaining loan balance \u00d7 (annual interest rate \u00f7 12)<\/span><\/p>\n<p><b>Worked example: $200,000 loan at 4% interest<\/b><\/p>\n<ol>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Start with the loan balance:<\/span> <span style=\"font-weight: 400;\">$200,000<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Convert the annual rate to a decimal: 4% = 0.04<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Divide the annual rate by 12 months: 0.04 \u00f7 12 = 0.00333<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Multiply by the loan balance: $200,000 \u00d7 0.00333 = <\/span><b>$666.67<\/b><\/li>\n<\/ol>\n<p><b>Monthly interest charge:<\/b> <b>$666.67<\/b><\/p>\n<p><span style=\"font-weight: 400;\">If your total monthly payment is $1,200, then:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">$666.67 goes to interest<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The remaining $533.33 goes toward principal<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">As your balance decreases, this calculation produces a smaller interest charge each month.<\/span><\/p>\n<p><b>Quick reference:<\/b><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Interest is calculated on the remaining balance, not the original loan amount<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The rate is divided by 12 for monthly payments<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Lower balances = lower interest over time<\/span><\/li>\n<\/ul>\n<h3><span style=\"font-weight: 400;\">Is mortgage interest calculated daily or monthly?<\/span><\/h3>\n<p><span style=\"font-weight: 400;\">This depends on the lender, but many mortgages accrue interest daily, even though you make payments monthly.<\/span><\/p>\n<p><b>Daily vs. monthly interest accrual<\/b><\/p>\n<table>\n<tbody>\n<tr>\n<td><b>Accrual method<\/b><\/td>\n<td><b>How it works<\/b><\/td>\n<td><b>What it means for borrowers<\/b><\/td>\n<\/tr>\n<tr>\n<td><b>Daily accrual<\/b><\/td>\n<td><span style=\"font-weight: 400;\">Interest builds each day based on the current balance<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Paying earlier in the month can slightly reduce interest<\/span><\/td>\n<\/tr>\n<tr>\n<td><b>Monthly accrual<\/b><\/td>\n<td><span style=\"font-weight: 400;\">Interest is calculated once per month<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Payment timing matters less<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p><b>Key takeaways:<\/b><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Daily accrual is common and normal<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Making payments earlier can reduce total interest over time<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Extra or early payments usually go straight to principal, lowering future interest<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">This is why even small additional payments can make a noticeable difference over the life of a loan.<\/span><\/p>\n<h3><span style=\"font-weight: 400;\">Examples: interest on $10,000, $300,000, and $500,000 loans<\/span><\/h3>\n<p><span style=\"font-weight: 400;\">To see how loan size affects interest costs, here are examples using a <\/span><b>6% fixed rate<\/b><span style=\"font-weight: 400;\">.<\/span><\/p>\n<table>\n<tbody>\n<tr>\n<td><b>Loan amount<\/b><\/td>\n<td><b>Term<\/b><\/td>\n<td><b>Rate<\/b><\/td>\n<td><b>Monthly payment*<\/b><\/td>\n<td><b>Total interest paid<\/b><\/td>\n<\/tr>\n<tr>\n<td><b>$10,000<\/b><\/td>\n<td><span style=\"font-weight: 400;\">30 years<\/span><\/td>\n<td><span style=\"font-weight: 400;\">6%<\/span><\/td>\n<td><span style=\"font-weight: 400;\">~$60<\/span><\/td>\n<td><span style=\"font-weight: 400;\">~$11,600<\/span><\/td>\n<\/tr>\n<tr>\n<td><b>$300,000<\/b><\/td>\n<td><span style=\"font-weight: 400;\">30 years<\/span><\/td>\n<td><span style=\"font-weight: 400;\">6%<\/span><\/td>\n<td><span style=\"font-weight: 400;\">~$1,799<\/span><\/td>\n<td><span style=\"font-weight: 400;\">~$347,600<\/span><\/td>\n<\/tr>\n<tr>\n<td><b>$500,000<\/b><\/td>\n<td><span style=\"font-weight: 400;\">30 years<\/span><\/td>\n<td><span style=\"font-weight: 400;\">6%<\/span><\/td>\n<td><span style=\"font-weight: 400;\">~$2,998<\/span><\/td>\n<td><span style=\"font-weight: 400;\">~$579,300<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p><span style=\"font-weight: 400;\">*Monthly payment includes principal and interest only.<\/span><\/p>\n<p><b>What this shows:<\/b><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Larger loans dramatically increase total interest paid<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Even with the same rate, interest costs scale with balance and time<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Shorter loan terms reduce total interest, even with higher monthly payments<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Understanding these mechanics helps explain why interest rate changes, extra payments, and loan term choices have such a big impact on the true <\/span><a href=\"https:\/\/www.rocketmortgage.com\/calculators\/mortgage-calculator\" data-wpel-link=\"external\" target=\"_blank\" rel=\"external noopener noreferrer\"><span style=\"font-weight: 400;\">cost of a mortgage<\/span><\/a><span style=\"font-weight: 400;\">.<\/span><\/p>\n<h2><span style=\"font-weight: 400;\">How different mortgage types handle interest<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Mortgage interest doesn\u2019t work the same way across all loan types. The structure of your mortgage\u2014whether the rate is fixed, adjustable, or temporarily interest-only\u2014affects how predictable your payments are, how much interest you pay over time, and how much risk you take on.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Here\u2019s a high-level comparison to set the stage:<\/span><\/p>\n<table>\n<tbody>\n<tr>\n<td><b>Loan type<\/b><\/td>\n<td><b>How interest works<\/b><\/td>\n<td><b>Payment stability<\/b><\/td>\n<td><b>Interest risk<\/b><\/td>\n<\/tr>\n<tr>\n<td><b>Fixed-rate mortgage<\/b><\/td>\n<td><span style=\"font-weight: 400;\">Rate stays the same for the full term<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Very stable<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Low<\/span><\/td>\n<\/tr>\n<tr>\n<td><b>Adjustable-rate mortgage (ARM)<\/b><\/td>\n<td><span style=\"font-weight: 400;\">Rate changes after an initial fixed period<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Variable<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Medium to high<\/span><\/td>\n<\/tr>\n<tr>\n<td><b>Interest-only mortgage<\/b><\/td>\n<td><span style=\"font-weight: 400;\">Payments cover interest only for a set time<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Low early, higher later<\/span><\/td>\n<td><span style=\"font-weight: 400;\">High<\/span><\/td>\n<\/tr>\n<tr>\n<td><b>Jumbo mortgage<\/b><\/td>\n<td><span style=\"font-weight: 400;\">Interest applies to larger, non-conforming loans<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Depends on rate type<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Varies<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<h2><span style=\"font-weight: 400;\">How mortgage interest affects your monthly payment<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Mortgage interest has a direct and lasting impact on what you pay each month. Even small changes in your interest rate can meaningfully change your monthly payment\u2014and add up to tens or even hundreds of thousands of dollars over the life of a loan.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">At a basic level:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Higher interest rates = higher monthly payments<\/b><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Lower interest rates = lower monthly payments<\/b><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The impact grows with <\/span><b>larger loan amounts<\/b><span style=\"font-weight: 400;\"> and <\/span><b>longer loan terms<\/b><\/li>\n<\/ul>\n<p><b>Example: $300,000 loan, 30-year term<\/b><\/p>\n<table>\n<tbody>\n<tr>\n<td><b>Interest rate<\/b><\/td>\n<td><b>Monthly payment (P&amp;I)<\/b><\/td>\n<td><b>Total interest paid<\/b><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">5.0%<\/span><\/td>\n<td><span style=\"font-weight: 400;\">~$1,610<\/span><\/td>\n<td><span style=\"font-weight: 400;\">~$279,600<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">6.0%<\/span><\/td>\n<td><span style=\"font-weight: 400;\">~$1,799<\/span><\/td>\n<td><span style=\"font-weight: 400;\">~$347,600<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">7.0%<\/span><\/td>\n<td><span style=\"font-weight: 400;\">~$1,996<\/span><\/td>\n<td><span style=\"font-weight: 400;\">~$418,500<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p><span style=\"font-weight: 400;\">A one-point increase from 6% to 7% raises the monthly payment by nearly $200\u2014and adds more than $70,000 in total interest over 30 years.<\/span><\/p>\n<h3><span style=\"font-weight: 400;\">Using mortgage calculators to estimate interest and payments<\/span><\/h3>\n<p><a href=\"https:\/\/www.redfin.com\/mortgage-calculator\" data-wpel-link=\"exclude\"><span style=\"font-weight: 400;\">Mortgage calculators<\/span><\/a><span style=\"font-weight: 400;\"> are one of the easiest ways to see how interest rates affect your payment before you apply for a loan. They let you adjust key variables and instantly see the results.<\/span><\/p>\n<h3><span style=\"font-weight: 400;\">Real-world scenarios: $300,000 and $500,000 mortgages<\/span><\/h3>\n<p><span style=\"font-weight: 400;\">To put interest into context, here\u2019s how it affects common loan sizes using a 30-year fixed-rate mortgage at example rates.<\/span><\/p>\n<table>\n<tbody>\n<tr>\n<td><b>Loan amount<\/b><\/td>\n<td><b>Rate<\/b><\/td>\n<td><b>Term<\/b><\/td>\n<td><b>Monthly payment (P&amp;I)<\/b><\/td>\n<td><b>Total interest<\/b><\/td>\n<\/tr>\n<tr>\n<td><b>$300,000<\/b><\/td>\n<td><span style=\"font-weight: 400;\">6.0%<\/span><\/td>\n<td><span style=\"font-weight: 400;\">30 years<\/span><\/td>\n<td><span style=\"font-weight: 400;\">~$1,799<\/span><\/td>\n<td><span style=\"font-weight: 400;\">~$347,600<\/span><\/td>\n<\/tr>\n<tr>\n<td><b>$300,000<\/b><\/td>\n<td><span style=\"font-weight: 400;\">7.0%<\/span><\/td>\n<td><span style=\"font-weight: 400;\">30 years<\/span><\/td>\n<td><span style=\"font-weight: 400;\">~$1,996<\/span><\/td>\n<td><span style=\"font-weight: 400;\">~$418,500<\/span><\/td>\n<\/tr>\n<tr>\n<td><b>$500,000<\/b><\/td>\n<td><span style=\"font-weight: 400;\">6.0%<\/span><\/td>\n<td><span style=\"font-weight: 400;\">30 years<\/span><\/td>\n<td><span style=\"font-weight: 400;\">~$2,998<\/span><\/td>\n<td><span style=\"font-weight: 400;\">~$579,300<\/span><\/td>\n<\/tr>\n<tr>\n<td><b>$500,000<\/b><\/td>\n<td><span style=\"font-weight: 400;\">7.0%<\/span><\/td>\n<td><span style=\"font-weight: 400;\">30 years<\/span><\/td>\n<td><span style=\"font-weight: 400;\">~$3,327<\/span><\/td>\n<td><span style=\"font-weight: 400;\">~$697,700<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p><b>What these scenarios show:<\/b><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Larger loans magnify the effect of interest rate changes<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Higher rates significantly increase lifetime borrowing costs<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Even modest rate differences can impact affordability<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Understanding this relationship helps borrowers decide <\/span><a href=\"https:\/\/www.redfin.com\/blog\/should-i-lock-my-mortgage-rate-today\/\" data-wpel-link=\"exclude\"><span style=\"font-weight: 400;\">when to lock a rate<\/span><\/a><span style=\"font-weight: 400;\">, whether to consider a shorter term, and how much home they can realistically afford without stretching their budget.<\/span><\/p>\n<h2><span style=\"font-weight: 400;\">Strategies to reduce how much mortgage interest you pay<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Mortgage interest isn\u2019t just about the rate you\u2019re quoted\u2014it\u2019s also shaped by the choices you make before you apply and after you close. Some strategies help you qualify for a lower rate upfront, while others reduce how much interest accrues over time.<\/span><\/p>\n<p><b>Think of it in two phases:<\/b><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Before you apply:<\/b><span style=\"font-weight: 400;\"> Focus on qualifying for the best possible rate<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>After you buy:<\/b><span style=\"font-weight: 400;\"> Use payment and refinancing strategies to shrink long-term interest<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Below are practical, lender-approved ways to reduce your total interest costs.<\/span><\/p>\n<h3><span style=\"font-weight: 400;\">Improve your credit profile before you apply<\/span><\/h3>\n<p><span style=\"font-weight: 400;\">Your credit profile plays a major role in determining your interest rate, and improvements made even a few months before applying can pay off.<\/span><\/p>\n<p><b>Prioritized actions (with typical impact timelines):<\/b><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Pay down credit card balances<\/b><span style=\"font-weight: 400;\"> (1\u20132 months): Lower utilization can quickly boost scores<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Make all payments on time<\/b><span style=\"font-weight: 400;\"> (ongoing): Avoids negative marks that hurt rates<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Avoid opening new accounts<\/b><span style=\"font-weight: 400;\"> (immediate): Prevents hard inquiries and score dips<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Correct credit report errors<\/b><span style=\"font-weight: 400;\"> (30\u201360 days): Removing mistakes can raise scores meaningfully<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Even a small score increase can unlock better pricing tiers and lower lifetime interest costs.<\/span><\/p>\n<h3><span style=\"font-weight: 400;\">Increase your down payment or reduce loan amount<\/span><\/h3>\n<p><span style=\"font-weight: 400;\">Putting more money down reduces how much you borrow\u2014and less borrowed money means less interest paid over time.<\/span><\/p>\n<p><b>Simple example: $400,000 home, 6% rate, 30-year term<\/b><\/p>\n<table>\n<tbody>\n<tr>\n<td><b>Down payment<\/b><\/td>\n<td><b>Loan amount<\/b><\/td>\n<td><b>Monthly payment (P&amp;I)<\/b><\/td>\n<td><b>Total interest<\/b><\/td>\n<\/tr>\n<tr>\n<td><b>5% ($20,000)<\/b><\/td>\n<td><span style=\"font-weight: 400;\">$380,000<\/span><\/td>\n<td><span style=\"font-weight: 400;\">~$2,278<\/span><\/td>\n<td><span style=\"font-weight: 400;\">~$440,000<\/span><\/td>\n<\/tr>\n<tr>\n<td><b>20% ($80,000)<\/b><\/td>\n<td><span style=\"font-weight: 400;\">$320,000<\/span><\/td>\n<td><span style=\"font-weight: 400;\">~$1,919<\/span><\/td>\n<td><span style=\"font-weight: 400;\">~$371,000<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p><span style=\"font-weight: 400;\">By increasing the down payment, you lower:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Your loan balance<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Your monthly payment<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Your total interest paid<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Reducing the loan amount\u2014by choosing a less expensive home\u2014has the same effect.<\/span><\/p>\n<h3><span style=\"font-weight: 400;\">Shop, compare, and negotiate mortgage rates<\/span><\/h3>\n<p><span style=\"font-weight: 400;\">Rates and fees vary by lender, even for the same borrower. Comparing multiple offers can reveal meaningful savings.<\/span><\/p>\n<p><a href=\"https:\/\/www.redfin.com\/guides\/questions-to-ask-mortgage-lender\" data-wpel-link=\"exclude\"><b>Questions to ask each lender<\/b><\/a><b>:<\/b><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">What\u2019s the interest rate and APR?<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Are points included or optional?<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">How long is the rate lock?<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Are there lender credits available?<\/span><\/li>\n<\/ul>\n<p><b>How rate quotes can differ:<\/b><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Same rate, different fees<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Lower rate with points vs. higher rate with credits<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Shorter vs. longer rate-lock periods<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Comparing at least three lenders helps ensure you\u2019re seeing competitive pricing.<\/span><\/p>\n<h3><span style=\"font-weight: 400;\">Using points, extra payments, and refinancing<\/span><\/h3>\n<p><span style=\"font-weight: 400;\">Once you have a mortgage, there are still ways to reduce how much interest you pay.<\/span><\/p>\n<table>\n<tbody>\n<tr>\n<td><b>Strategy<\/b><\/td>\n<td><b>How it works<\/b><\/td>\n<td><b>Best for<\/b><\/td>\n<\/tr>\n<tr>\n<td><b>Mortgage points<\/b><\/td>\n<td><span style=\"font-weight: 400;\">Pay upfront fees to lower your interest rate<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Buyers planning to stay long-term<\/span><\/td>\n<\/tr>\n<tr>\n<td><b>Extra principal payments<\/b><\/td>\n<td><span style=\"font-weight: 400;\">Reduce the loan balance faster, cutting interest<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Borrowers with extra cash flow<\/span><\/td>\n<\/tr>\n<tr>\n<td><b>Refinancing<\/b><\/td>\n<td><span style=\"font-weight: 400;\">Replace your loan with a lower-rate mortgage<\/span><\/td>\n<td><span style=\"font-weight: 400;\">When rates drop or credit improves<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p><b>Key takeaway: <\/b><span style=\"font-weight: 400;\">Lowering your balance earlier\u2014or securing a lower rate later\u2014reduces the amount of interest your loan can generate over time.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Taken together, these strategies can significantly reduce the true cost of homeownership\u2014often without changing the home you buy, just how you finance it.<\/span><\/p>\n<h2><span style=\"font-weight: 400;\">Frequently asked questions about mortgage interest\u00a0<\/span><\/h2>\n<h3><span style=\"font-weight: 400;\">1. How exactly do lenders calculate the interest portion of my mortgage payment?<\/span><\/h3>\n<p><span style=\"font-weight: 400;\">Lenders calculate interest using your remaining loan balance and annual interest rate, then divide by 12 for monthly payments.<\/span><\/p>\n<p><b>Mini example:<\/b><\/p>\n<ol>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Loan balance: $300,000<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Annual rate: 6% (0.06)<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Monthly rate: 0.06 \u00f7 12 = 0.005<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Monthly interest: $300,000 \u00d7 0.005 = <\/span><b>$1,500<\/b><\/li>\n<\/ol>\n<p><span style=\"font-weight: 400;\">The rest of your payment goes toward principal based on your amortization schedule.<\/span><\/p>\n<h3><span style=\"font-weight: 400;\">2. What would my payment look like on a $500,000 mortgage for 30 years?<\/span><\/h3>\n<p><span style=\"font-weight: 400;\">Here\u2019s a ballpark look at monthly <\/span><b>principal-and-interest<\/b><span style=\"font-weight: 400;\"> payments:<\/span><\/p>\n<table>\n<tbody>\n<tr>\n<td><b>Rate<\/b><\/td>\n<td><b>Monthly payment<\/b><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">5%<\/span><\/td>\n<td><span style=\"font-weight: 400;\">~$2,684<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">6%<\/span><\/td>\n<td><span style=\"font-weight: 400;\">~$2,998<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">7%<\/span><\/td>\n<td><span style=\"font-weight: 400;\">~$3,327<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p><span style=\"font-weight: 400;\">Higher rates increase both the monthly payment and the total interest paid over time.<\/span><\/p>\n<h3><span style=\"font-weight: 400;\">3. If a loan has 6% interest, how much does borrowing $10,000 really cost?<\/span><\/h3>\n<p><span style=\"font-weight: 400;\">It depends on how long you take to repay it.<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Simple annual interest: <\/b><span style=\"font-weight: 400;\">$10,000 \u00d7 6% = $600 per year<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>5-year amortized loan: <\/b><span style=\"font-weight: 400;\">Higher monthly payments, lower total interest<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>10-year amortized loan: <\/b><span style=\"font-weight: 400;\">Lower monthly payments, higher total interest<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Longer terms reduce monthly cost but increase total interest paid.<\/span><\/p>\n<h3><span style=\"font-weight: 400;\">4. What is the approximate monthly cost of a $300,000 mortgage at 6%?<\/span><\/h3>\n<p><span style=\"font-weight: 400;\">For a standard 30-year term:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Monthly interest rate: 6% \u00f7 12<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Estimated monthly P&amp;I payment: <\/span><b>~$1,799<\/b><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Property taxes, insurance, and HOA fees would be added on top of this amount.<\/span><\/p>\n<h3><span style=\"font-weight: 400;\">5. Does my lender charge mortgage interest based on a daily or monthly calculation?<\/span><\/h3>\n<p><span style=\"font-weight: 400;\">Most mortgages accrue interest daily, even though payments are due monthly.<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Daily accrual:<\/b><span style=\"font-weight: 400;\"> Interest builds each day based on your balance (most common)<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Monthly calculation:<\/b><span style=\"font-weight: 400;\"> Interest is applied once per month (less common)<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Paying earlier can slightly reduce interest when daily accrual applies.<\/span><\/p>\n<h3><span style=\"font-weight: 400;\">6. How do fixed-rate and adjustable-rate loans change what I pay in interest over time?<\/span><\/h3>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Fixed-rate loans:<\/b><span style=\"font-weight: 400;\"> Interest rate stays the same, creating predictable payments<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Adjustable-rate loans:<\/b><span style=\"font-weight: 400;\"> Rates can rise or fall after an initial fixed period<\/span><\/li>\n<\/ul>\n<p><b>ARM example: <\/b><span style=\"font-weight: 400;\">A 5\/1 ARM may start at 5% for five years, then adjust annually\u2014potentially increasing payments if rates rise.<\/span><\/p>\n<h3><span style=\"font-weight: 400;\">7. What are the best ways to cut down the total mortgage interest I\u2019ll pay?<\/span><\/h3>\n<p><b>Quick wins:<\/b><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Improve your credit before applying<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Compare multiple lenders<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Make extra principal payments<\/span><\/li>\n<\/ul>\n<p><b>Bigger moves:<\/b><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Increase your down payment<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Choose a shorter loan term<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Refinance to a lower rate when possible<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Reducing either your rate or your loan balance earlier has the biggest impact on long-term interest costs.<\/span><\/p>\n<div class=\"ast-oembed-container \" style=\"height: 100%;\"><iframe title=\"How Does Mortgage Interest Work? (Mortgage Payments Explained) #realestate  #interestrates\" width=\"500\" height=\"281\" src=\"https:\/\/www.youtube.com\/embed\/UH46LN2N2lw?feature=oembed\" frameborder=\"0\" allow=\"accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share\" referrerpolicy=\"strict-origin-when-cross-origin\" allowfullscreen><\/iframe><\/div>\n","protected":false},"excerpt":{"rendered":"<p>Learn how mortgage interest works, how it\u2019s calculated, and how it affects your payments so you can choose the right loan and rate. Understand the math and save.<\/p>\n","protected":false},"author":562,"featured_media":75370,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"default","adv-header-id-meta":"","stick-header-meta":"default","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"set","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"var(--ast-global-color-4)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"footnotes":""},"categories":[34277],"tags":[34642],"coauthors":[34346],"class_list":["post-95907","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance","tag-mortgage"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v24.7 (Yoast SEO v27.4) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>How Does Mortgage Interest Work? Rates &amp; Examples - Redfin<\/title>\n<meta name=\"description\" content=\"Learn how mortgage interest works, how it\u2019s calculated, and how it affects your payments so you can choose the right loan and rate.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.redfin.com\/blog\/how-does-mortgage-interest-work\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"How Does Mortgage Interest Work?\" \/>\n<meta property=\"og:description\" content=\"Learn how mortgage interest works, how it\u2019s calculated, and how it affects your payments so you can choose the right loan and rate.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.redfin.com\/blog\/how-does-mortgage-interest-work\/\" \/>\n<meta property=\"og:site_name\" content=\"Redfin | Real Estate Tips for Home Buying, Selling &amp; More\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/redfin\" \/>\n<meta property=\"article:published_time\" content=\"2025-12-30T17:41:44+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.redfin.com\/blog\/wp-content\/uploads\/2022\/03\/2716-Geraghty-Ave-11-1.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"1200\" \/>\n\t<meta property=\"og:image:height\" content=\"800\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Marissa Crum\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@redfin\" \/>\n<meta name=\"twitter:site\" content=\"@redfin\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Marissa Crum\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"11 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\\\/\\\/www.redfin.com/blog\\\/how-does-mortgage-interest-work\\\/#article\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/www.redfin.com/blog\\\/how-does-mortgage-interest-work\\\/\"},\"author\":{\"name\":\"Marissa Crum\",\"@id\":\"https:\\\/\\\/www.redfin.com/blog\\\/#\\\/schema\\\/person\\\/dba858ab820bf024303a819ca6d10eaf\"},\"headline\":\"How Does Mortgage Interest Work?\",\"datePublished\":\"2025-12-30T17:41:44+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\\\/\\\/www.redfin.com/blog\\\/how-does-mortgage-interest-work\\\/\"},\"wordCount\":2248,\"publisher\":{\"@id\":\"https:\\\/\\\/www.redfin.com/blog\\\/#organization\"},\"image\":{\"@id\":\"https:\\\/\\\/www.redfin.com/blog\\\/how-does-mortgage-interest-work\\\/#primaryimage\"},\"thumbnailUrl\":\"https:\\\/\\\/www.redfin.com/blog\\\/wp-content\\\/uploads\\\/2022\\\/03\\\/2716-Geraghty-Ave-11-1.jpg\",\"keywords\":[\"Mortgage\"],\"articleSection\":[\"Finance\"],\"inLanguage\":\"en-US\",\"copyrightYear\":\"2025\",\"copyrightHolder\":{\"@id\":\"https:\\\/\\\/www.redfin.com/blog\\\/#organization\"}},{\"@type\":\"WebPage\",\"@id\":\"https:\\\/\\\/www.redfin.com/blog\\\/how-does-mortgage-interest-work\\\/\",\"url\":\"https:\\\/\\\/www.redfin.com/blog\\\/how-does-mortgage-interest-work\\\/\",\"name\":\"How Does Mortgage Interest Work? Rates & Examples - Redfin\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/www.redfin.com/blog\\\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\\\/\\\/www.redfin.com/blog\\\/how-does-mortgage-interest-work\\\/#primaryimage\"},\"image\":{\"@id\":\"https:\\\/\\\/www.redfin.com/blog\\\/how-does-mortgage-interest-work\\\/#primaryimage\"},\"thumbnailUrl\":\"https:\\\/\\\/www.redfin.com/blog\\\/wp-content\\\/uploads\\\/2022\\\/03\\\/2716-Geraghty-Ave-11-1.jpg\",\"datePublished\":\"2025-12-30T17:41:44+00:00\",\"description\":\"Learn how mortgage interest works, how it\u2019s calculated, and how it affects your payments so you can choose the right loan and rate.\",\"breadcrumb\":{\"@id\":\"https:\\\/\\\/www.redfin.com/blog\\\/how-does-mortgage-interest-work\\\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\\\/\\\/www.redfin.com/blog\\\/how-does-mortgage-interest-work\\\/\"]}]},{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\\\/\\\/www.redfin.com/blog\\\/how-does-mortgage-interest-work\\\/#primaryimage\",\"url\":\"https:\\\/\\\/www.redfin.com/blog\\\/wp-content\\\/uploads\\\/2022\\\/03\\\/2716-Geraghty-Ave-11-1.jpg\",\"contentUrl\":\"https:\\\/\\\/www.redfin.com/blog\\\/wp-content\\\/uploads\\\/2022\\\/03\\\/2716-Geraghty-Ave-11-1.jpg\",\"width\":1200,\"height\":800,\"caption\":\"Modern home with a pool\"},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\\\/\\\/www.redfin.com/blog\\\/how-does-mortgage-interest-work\\\/#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\\\/\\\/www.redfin.com/blog\\\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"How Does Mortgage Interest Work?\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\\\/\\\/www.redfin.com/blog\\\/#website\",\"url\":\"https:\\\/\\\/www.redfin.com/blog\\\/\",\"name\":\"Redfin | Real Estate Tips for Home Buying, Selling &amp; More\",\"description\":\"Real estate on Wall Street, Main Street and your street.\",\"publisher\":{\"@id\":\"https:\\\/\\\/www.redfin.com/blog\\\/#organization\"},\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\\\/\\\/www.redfin.com/blog\\\/?s={search_term_string}\"},\"query-input\":{\"@type\":\"PropertyValueSpecification\",\"valueRequired\":true,\"valueName\":\"search_term_string\"}}],\"inLanguage\":\"en-US\"},{\"@type\":\"Organization\",\"@id\":\"https:\\\/\\\/www.redfin.com/blog\\\/#organization\",\"name\":\"Redfin\",\"url\":\"https:\\\/\\\/www.redfin.com/blog\\\/\",\"logo\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\\\/\\\/www.redfin.com/blog\\\/#\\\/schema\\\/logo\\\/image\\\/\",\"url\":\"https:\\\/\\\/www.redfin.com\\\/blog\\\/wp-content\\\/uploads\\\/2020\\\/03\\\/Redfin-logo-512x512-1.jpg\",\"contentUrl\":\"https:\\\/\\\/www.redfin.com\\\/blog\\\/wp-content\\\/uploads\\\/2020\\\/03\\\/Redfin-logo-512x512-1.jpg\",\"width\":512,\"height\":512,\"caption\":\"Redfin\"},\"image\":{\"@id\":\"https:\\\/\\\/www.redfin.com/blog\\\/#\\\/schema\\\/logo\\\/image\\\/\"},\"sameAs\":[\"https:\\\/\\\/www.facebook.com\\\/redfin\",\"https:\\\/\\\/x.com\\\/redfin\",\"https:\\\/\\\/www.instagram.com\\\/redfinrealestate\\\/\",\"https:\\\/\\\/www.linkedin.com\\\/company\\\/redfin\",\"https:\\\/\\\/www.pinterest.com\\\/redfin\\\/\",\"https:\\\/\\\/www.youtube.com\\\/channel\\\/UCMIuo1QSGcmWnevT9jdC_Ow\",\"https:\\\/\\\/en.wikipedia.org\\\/wiki\\\/Redfin\"]},{\"@type\":\"Person\",\"@id\":\"https:\\\/\\\/www.redfin.com/blog\\\/#\\\/schema\\\/person\\\/dba858ab820bf024303a819ca6d10eaf\",\"name\":\"Marissa Crum\",\"description\":\"Marissa is a Content Marketing Specialist at Redfin with 4 years of experience creating real estate and lifestyle content. For the past 2 years, she has focused on writing mortgage and financing resources that help readers make informed decisions. Living in Los Angeles, she balances city life with time outdoors and a love for sunsets.\",\"url\":\"https:\\\/\\\/www.redfin.com/blog\\\/author\\\/marissa-crumredfin-com\\\/\"}]}<\/script>\n<!-- \/ Yoast SEO Premium plugin. -->","yoast_head_json":{"title":"How Does Mortgage Interest Work? Rates & Examples - Redfin","description":"Learn how mortgage interest works, how it\u2019s calculated, and how it affects your payments so you can choose the right loan and rate.","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/www.redfin.com\/blog\/how-does-mortgage-interest-work\/","og_locale":"en_US","og_type":"article","og_title":"How Does Mortgage Interest Work?","og_description":"Learn how mortgage interest works, how it\u2019s calculated, and how it affects your payments so you can choose the right loan and rate.","og_url":"https:\/\/www.redfin.com\/blog\/how-does-mortgage-interest-work\/","og_site_name":"Redfin | Real Estate Tips for Home Buying, Selling &amp; More","article_publisher":"https:\/\/www.facebook.com\/redfin","article_published_time":"2025-12-30T17:41:44+00:00","og_image":[{"width":1200,"height":800,"url":"https:\/\/www.redfin.com\/blog\/wp-content\/uploads\/2022\/03\/2716-Geraghty-Ave-11-1.jpg","type":"image\/jpeg"}],"author":"Marissa Crum","twitter_card":"summary_large_image","twitter_creator":"@redfin","twitter_site":"@redfin","twitter_misc":{"Written by":"Marissa Crum","Est. reading time":"11 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"Article","@id":"https:\/\/www.redfin.com\/blog\/how-does-mortgage-interest-work\/#article","isPartOf":{"@id":"https:\/\/www.redfin.com\/blog\/how-does-mortgage-interest-work\/"},"author":{"name":"Marissa Crum","@id":"https:\/\/www.redfin.com\/blog\/#\/schema\/person\/dba858ab820bf024303a819ca6d10eaf"},"headline":"How Does Mortgage Interest Work?","datePublished":"2025-12-30T17:41:44+00:00","mainEntityOfPage":{"@id":"https:\/\/www.redfin.com\/blog\/how-does-mortgage-interest-work\/"},"wordCount":2248,"publisher":{"@id":"https:\/\/www.redfin.com\/blog\/#organization"},"image":{"@id":"https:\/\/www.redfin.com\/blog\/how-does-mortgage-interest-work\/#primaryimage"},"thumbnailUrl":"https:\/\/www.redfin.com\/blog\/wp-content\/uploads\/2022\/03\/2716-Geraghty-Ave-11-1.jpg","keywords":["Mortgage"],"articleSection":["Finance"],"inLanguage":"en-US","copyrightYear":"2025","copyrightHolder":{"@id":"https:\/\/www.redfin.com\/blog\/#organization"}},{"@type":"WebPage","@id":"https:\/\/www.redfin.com\/blog\/how-does-mortgage-interest-work\/","url":"https:\/\/www.redfin.com\/blog\/how-does-mortgage-interest-work\/","name":"How Does Mortgage Interest Work? Rates & Examples - Redfin","isPartOf":{"@id":"https:\/\/www.redfin.com\/blog\/#website"},"primaryImageOfPage":{"@id":"https:\/\/www.redfin.com\/blog\/how-does-mortgage-interest-work\/#primaryimage"},"image":{"@id":"https:\/\/www.redfin.com\/blog\/how-does-mortgage-interest-work\/#primaryimage"},"thumbnailUrl":"https:\/\/www.redfin.com\/blog\/wp-content\/uploads\/2022\/03\/2716-Geraghty-Ave-11-1.jpg","datePublished":"2025-12-30T17:41:44+00:00","description":"Learn how mortgage interest works, how it\u2019s calculated, and how it affects your payments so you can choose the right loan and rate.","breadcrumb":{"@id":"https:\/\/www.redfin.com\/blog\/how-does-mortgage-interest-work\/#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/www.redfin.com\/blog\/how-does-mortgage-interest-work\/"]}]},{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/www.redfin.com\/blog\/how-does-mortgage-interest-work\/#primaryimage","url":"https:\/\/www.redfin.com\/blog\/wp-content\/uploads\/2022\/03\/2716-Geraghty-Ave-11-1.jpg","contentUrl":"https:\/\/www.redfin.com\/blog\/wp-content\/uploads\/2022\/03\/2716-Geraghty-Ave-11-1.jpg","width":1200,"height":800,"caption":"Modern home with a pool"},{"@type":"BreadcrumbList","@id":"https:\/\/www.redfin.com\/blog\/how-does-mortgage-interest-work\/#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/www.redfin.com\/blog\/"},{"@type":"ListItem","position":2,"name":"How Does Mortgage Interest Work?"}]},{"@type":"WebSite","@id":"https:\/\/www.redfin.com\/blog\/#website","url":"https:\/\/www.redfin.com\/blog\/","name":"Redfin | Real Estate Tips for Home Buying, Selling &amp; More","description":"Real estate on Wall Street, Main Street and your street.","publisher":{"@id":"https:\/\/www.redfin.com\/blog\/#organization"},"potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/www.redfin.com\/blog\/?s={search_term_string}"},"query-input":{"@type":"PropertyValueSpecification","valueRequired":true,"valueName":"search_term_string"}}],"inLanguage":"en-US"},{"@type":"Organization","@id":"https:\/\/www.redfin.com\/blog\/#organization","name":"Redfin","url":"https:\/\/www.redfin.com\/blog\/","logo":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/www.redfin.com\/blog\/#\/schema\/logo\/image\/","url":"https:\/\/www.redfin.com\/blog\/wp-content\/uploads\/2020\/03\/Redfin-logo-512x512-1.jpg","contentUrl":"https:\/\/www.redfin.com\/blog\/wp-content\/uploads\/2020\/03\/Redfin-logo-512x512-1.jpg","width":512,"height":512,"caption":"Redfin"},"image":{"@id":"https:\/\/www.redfin.com\/blog\/#\/schema\/logo\/image\/"},"sameAs":["https:\/\/www.facebook.com\/redfin","https:\/\/x.com\/redfin","https:\/\/www.instagram.com\/redfinrealestate\/","https:\/\/www.linkedin.com\/company\/redfin","https:\/\/www.pinterest.com\/redfin\/","https:\/\/www.youtube.com\/channel\/UCMIuo1QSGcmWnevT9jdC_Ow","https:\/\/en.wikipedia.org\/wiki\/Redfin"]},{"@type":"Person","@id":"https:\/\/www.redfin.com\/blog\/#\/schema\/person\/dba858ab820bf024303a819ca6d10eaf","name":"Marissa Crum","description":"Marissa is a Content Marketing Specialist at Redfin with 4 years of experience creating real estate and lifestyle content. For the past 2 years, she has focused on writing mortgage and financing resources that help readers make informed decisions. Living in Los Angeles, she balances city life with time outdoors and a love for sunsets.","url":"https:\/\/www.redfin.com\/blog\/author\/marissa-crumredfin-com\/"}]}},"_links":{"self":[{"href":"https:\/\/www.redfin.com\/blog\/wp-json\/wp\/v2\/posts\/95907","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.redfin.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.redfin.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.redfin.com\/blog\/wp-json\/wp\/v2\/users\/562"}],"replies":[{"embeddable":true,"href":"https:\/\/www.redfin.com\/blog\/wp-json\/wp\/v2\/comments?post=95907"}],"version-history":[{"count":2,"href":"https:\/\/www.redfin.com\/blog\/wp-json\/wp\/v2\/posts\/95907\/revisions"}],"predecessor-version":[{"id":108363,"href":"https:\/\/www.redfin.com\/blog\/wp-json\/wp\/v2\/posts\/95907\/revisions\/108363"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.redfin.com\/blog\/wp-json\/wp\/v2\/media\/75370"}],"wp:attachment":[{"href":"https:\/\/www.redfin.com\/blog\/wp-json\/wp\/v2\/media?parent=95907"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.redfin.com\/blog\/wp-json\/wp\/v2\/categories?post=95907"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.redfin.com\/blog\/wp-json\/wp\/v2\/tags?post=95907"},{"taxonomy":"author","embeddable":true,"href":"https:\/\/www.redfin.com\/blog\/wp-json\/wp\/v2\/coauthors?post=95907"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}