Mortgage Protection Insurance Calculator

The coverage you need equals your remaining balance

Mortgage protection insurance has a refreshingly simple coverage target: the amount still owed on your home loan. If that balance were paid off, your family could keep the house without the monthly payment hanging over them. The tricky part is knowing your remaining balance, because a mortgage doesn’t pay down in a straight line — early payments are mostly interest, so the balance falls slowly at first. The calculator above solves this with standard amortization math, turning your original loan amount, rate, term and years paid into your current balance.

How the amortization works

Each monthly payment is split between interest (charged on the outstanding balance) and principal (the part that actually reduces what you owe). Because the balance is highest at the start, early payments are heavily weighted toward interest, and only later does principal dominate. That’s why, five years into a 30-year loan, you’ve paid down far less than one-sixth of the balance. The calculator applies the standard remaining-balance formula so you don’t have to read it off a statement:

A worked example

Take a $320,000 loan at 6.5% over 30 years, five years in. The monthly principal-and-interest payment is about $2,023, and after 60 payments the remaining balance is roughly $299,000 — notice how little of the $320,000 has been repaid, because most early dollars went to interest. So a mortgage protection policy taken out now would need about $299,000 of coverage, and that required amount keeps falling each year as principal is repaid.

Mortgage protection vs. level term life

Here’s the comparison worth making before you buy. Traditional mortgage protection insurance is usually decreasing term — the benefit shrinks alongside your balance — and the payout typically goes to the lender. A level term life policy for the same initial amount keeps its full death benefit for the whole term and pays your family directly, who can then choose whether to pay off the mortgage, invest, or cover other needs. Level term is often cheaper too. For most healthy borrowers, a level term policy sized to the mortgage (or to your full needs via the DIME method) is the stronger choice. Mortgage protection can still make sense for people who struggle to qualify for standard term life because of health, since some mortgage-protection products have simplified underwriting.

What to do with your number

Use the remaining balance the calculator produces as your coverage target, then get quotes for both a level term life policy and a mortgage protection policy of that amount so you can compare price and structure directly. If you have dependents and other obligations beyond the mortgage, consider sizing a single term policy to your whole need with our life insurance calculator rather than buying a separate policy just for the house — one well-sized policy is usually simpler and cheaper than several narrow ones.