Mortgage Calculator

Find your true monthly mortgage payment — not just principal and interest, but the full PITI figure: principal, interest, property taxes, homeowners insurance, PMI when your down payment is under 20%, and HOA dues. Add an extra payment to see years and interest saved, and compare 15-year versus 30-year terms side by side.

What Is PITI?

Most mortgage calculators show only principal and interest (P&I) — but that is not what leaves your bank account. Lenders usually collect four (sometimes five) items in one monthly payment, abbreviated PITI: Principal (repaying the loan), Interest (the lender’s charge), Taxes (property tax, held in escrow and paid to your county), and Insurance (homeowners insurance, also escrowed). Add HOA dues if your property has an association, and PMI if your down payment is under 20%. The calculator above builds all of them into one honest monthly figure.

A common affordability guideline is the 28% rule: keep total housing costs (PITI + HOA) at or below 28% of gross monthly income. On $7,000 a month gross, that means roughly $1,960 for housing. Lenders use a similar debt-to-income test when approving loans.

How to Use This Mortgage Calculator: Step by Step

A mortgage estimate is only as good as its inputs, and the inputs most people guess are exactly the ones that move the payment most. Enter them in this order.

1. Enter the home price and down payment separately. The loan is the difference between them, and the down payment percentage decides whether PMI applies. Entering the price alone hides both facts.
2. Enter the interest rate you were actually quoted. Online averages are a starting point, but your rate depends on credit score, down payment, and loan type. A quarter-point difference changes the payment for decades.
3. Pick the term. Start with 30 years, then compare 20 and 15. The comparison table in the result shows what each shorter term saves in total interest.
4. Enter property tax and insurance honestly. Use the seller’s or county’s figures, not round guesses. On the $350,000 example, tax and insurance add over $400 a month — guessing them wrong breaks the whole estimate.
5. Add HOA dues and any planned extra payment. HOA dues are part of the monthly bill even though they are not part of the loan, and the extra payment shows the payoff date and interest saved.

Finally, compare the result with the affordability rule below. If the total monthly payment exceeds 28% of gross income, the loan is likely to feel tight no matter how good the rate looks.

The Mortgage Formula

Principal and interest come from the standard amortization formula:

• M = P × r × (1 + r)ⁿ ÷ ((1 + r)ⁿ − 1)
• P = loan amount (price minus down payment)
• r = monthly rate (annual rate ÷ 12 ÷ 100)
• n = number of payments (years × 12)

Example: a $350,000 home with 20% down ($70,000) leaves a $280,000 loan. At 6.5% over 30 years, P&I is about $1,770 a month, and total interest reaches roughly $357,000 — more than the loan itself. Add $3,500 a year in tax and $1,500 in insurance and the real monthly payment is about $2,186. That gap between the advertised P&I and the real payment is why PITI calculators exist.

The US Consumer Financial Protection Bureau explains mortgage disclosures, escrow, and PMI cancellation rights, and the Federal Reserve publishes data on how mortgage rates track the wider economy.

What Is PMI and When Does It End?

Private Mortgage Insurance protects the lender — not you — if you default, and lenders require it when your down payment is under 20%. It typically costs 0.5% to 1% of the loan per year, split monthly. Under US law, PMI must normally end automatically once your balance falls to 78% of the home’s original value, and you can usually request cancellation at 80% equity. A larger down payment avoids PMI entirely and also lowers every monthly payment.

15 Years vs 30 Years

The shorter term is the single biggest interest saver available to most buyers. On a $280,000 loan at 6.5%, the 15-year P&I is about $2,440 versus $1,770 for 30 years — but total interest falls from about $357,000 to roughly $159,000, a saving near $198,000. The trade-off is cash-flow risk: the higher payment leaves less room for emergencies, so many buyers choose the 30-year term and make voluntary extra payments instead, keeping flexibility while still cutting interest.

Tips for Home Buyers

• Get quotes from at least three lenders. Even 0.25% on a typical loan costs tens of thousands over 30 years.
• Budget beyond PITI. Maintenance averages 1–2% of home value per year, plus utilities and furnishings.
• Do not max out approval. The amount a lender approves is a ceiling, not a recommendation — the 28% rule is the safer guide.
• Ask about PMI removal. If you start under 20% down, know the exact balance at which PMI drops off and request it promptly.
• Extra payments beat refinancing for small wins. A modest extra monthly payment often saves more, with no closing costs.

Related tools: the compound interest calculator for what a bigger down payment fund could grow to, and the tax calculator for the wider tax picture.

Worked Example: Buying a $400,000 Home

With a 10% down payment of $40,000, the loan is $360,000. At 6.75% over 30 years, principal and interest come to about $2,335 a month, and total interest over the life of the loan reaches roughly $480,000 — more than the loan itself. That is the reality of long mortgages at today’s rates, and it is why the down payment and term choices matter so much.

Now add the rest of the monthly bill. Property tax of $4,800 a year adds $400 a month; homeowners insurance of $1,800 a year adds $150; and because the down payment is under 20%, PMI at 0.75% of the loan a year adds about $225 a month. The full monthly payment is therefore about $2,335 + $400 + $150 + $225 = $3,110 — roughly $775 more than the P and I figure alone. Anyone budgeting from the P and I number will be short every single month.

The same home with 20% down ($80,000) changes everything: the loan falls to $320,000, P and I drops to about $2,075, PMI disappears entirely, and the monthly total falls to about $2,625. The bigger down payment saves about $485 a month and roughly $53,000 in interest over 30 years — which is why saving longer before buying often beats buying sooner with a small deposit.

Down Payment Sizes Compared

On a $400,000 home at 6.75% over 30 years, here is how the down payment changes the monthly picture (P and I only, before tax, insurance, and PMI):

• 0% down ($0): $400,000 loan, P and I about $2,594 a month, PMI required.
• 5% down ($20,000): $380,000 loan, P and I about $2,464 a month, PMI required.
• 10% down ($40,000): $360,000 loan, P and I about $2,335 a month, PMI required.
• 20% down ($80,000): $320,000 loan, P and I about $2,075 a month, no PMI.

Every extra 5% of down payment on this home saves roughly $130 a month in P and I alone, before the PMI saving. The jump from 10% to 20% is the most valuable step, because it removes PMI as well as shrinking the loan. Buyers who are close to 20% should run the numbers on waiting a few more months — the monthly saving usually repays the wait within a year or two.

Refinancing: When It Pays

Refinancing means replacing your mortgage with a new one, usually at a lower rate. The key question is the break-even point: divide the closing costs by the monthly saving. If refinancing costs $5,000 and saves $180 a month, break-even is 5,000 ÷ 180 = about 28 months. Stay in the home longer than that and you profit; move or refinance again sooner and you lose.

A common rule of thumb says to refinance when rates fall by at least 0.75% to 1%, but the break-even math is more reliable than any rule. Large loans break even faster because the same rate drop saves more dollars; small loans may never break even after fees. Also consider the term: refinancing a 30-year loan you have held for 10 years into a new 30-year loan restarts the amortization clock, and the extra years of interest can wipe out the rate saving. A 20-year or 15-year refinance often keeps the saving intact.

The compound interest calculator shows what the monthly saving grows to if invested instead of spent.

Understanding Your Escrow Account

Escrow is the part of mortgage servicing most buyers never see explained. Each month, your servicer collects one-twelfth of your annual property tax and one-twelfth of your annual insurance premium along with the loan payment, holds the money in an escrow account, and pays the tax and insurance bills when they come due. You never pay those bills directly, but you fund every dollar of them.

• Escrow is not a fee. It is your own tax and insurance money, collected early so the bills are covered. The servicer earns nothing from holding it beyond a small permitted cushion.
• Your payment can change without a rate change. When the county reassesses your home or your insurer raises premiums, the servicer recalculates the escrow portion and your monthly payment moves — even on a fixed-rate loan.
• Shortages and surpluses happen yearly. After the annual escrow analysis, a shortage is usually spread over the next 12 months, while a surplus may be refunded or applied to future payments.
• You can usually waive escrow with 20% down. Many lenders allow it, but then you must pay tax and insurance bills yourself, on time, in full — missing them risks liens and forced insurance.
• Flood and extra insurance may be escrowed too. If your area requires flood insurance, expect it in the same monthly collection.

When comparing lenders, ask each one to show the escrow breakdown separately. Two lenders quoting the same rate can show different monthly payments purely because their tax and insurance estimates differ — and the cheaper-looking quote may simply be underestimating the bills you will actually pay.

Fixed-Rate vs Adjustable-Rate Mortgages

The rate type decides whether your payment is a certainty or a variable. Both have a place, and the choice depends on how long you will stay and how much payment movement you can absorb.

The ARM trap to avoid is planning to refinance before the adjustment period ends. That plan works only if rates, home values, and your credit all cooperate at the same moment. If any of the three fails, you are stuck with the adjusted payment — so only take an ARM if you can afford the fully adjusted payment, not just the teaser rate. Model the adjusted payment by entering the higher rate and the remaining term into the calculator above.

How Lenders Decide What You Can Borrow

Lenders do not approve the amount you ask for; they approve the amount their formulas say you can repay. Two ratios dominate: the housing ratio (housing costs divided by gross income) and the total debt ratio (all monthly debts divided by gross income). Both use gross income, not take-home pay, which is why an approval can feel generous compared with your actual budget.

The 28/36 Rule Explained

The traditional guideline caps housing costs at 28% of gross monthly income and all debts at 36%. Many lenders stretch these limits — especially for strong credit — but the guideline remains a useful sanity check, because it was designed around the budgets that actually survive income shocks.

• Use gross income for the ratio, take-home for the budget. The lender’s ratio and your lived budget are different tests — pass both before buying.
• Existing debts shrink the housing allowance. A $600 car payment inside a $2,520 total-debt cap leaves $1,920 for housing, not the full $1,960 housing cap.
• Credit score moves the rate, not the ratio. A better score gets a lower rate and therefore a lower payment for the same loan — which is how good credit buys a bigger house at the same monthly cost.
• Reserves matter. Lenders like to see several months of payments in savings after closing. An approval with no reserves left is fragile by construction.

Check the income side of the ratio with the salary calculator, converting your real schedule — including overtime and unpaid weeks — into an honest annual figure before the lender does it for you.

Closing Costs: The Bill After the Price

The down payment is not the only cash needed at closing. Closing costs — lender fees, title work, recording, prepaid tax and insurance, and more — typically run 2% to 5% of the loan amount, and they are due in cash on top of the down payment unless the seller or lender credits them. On a $280,000 loan, that is roughly $5,600 to $14,000 that many first-time buyers forget to budget.

• Origination and lender fees. The lender’s charge for processing and underwriting, sometimes including discount points bought to lower the rate.
• Title search and title insurance. Verifies the seller actually owns the home free of liens, and insures the lender (and optionally you) against title defects.
• Appraisal and inspection. The appraisal protects the lender by confirming value; the inspection protects you by finding defects before you own them. Never skip the inspection to save a few hundred dollars.
• Prepaids and escrow funding. Several months of tax and insurance collected at closing to fund the escrow account, plus prepaid interest from closing day to month-end.
• Recording and transfer charges. Government fees for recording the deed and mortgage, which vary widely by location.

Ask every lender for a Loan Estimate on the same day, with the same loan details, and compare the closing-cost sections line by line. Lenders must honour the Loan Estimate within set tolerances, which makes it the most reliable comparison document you will receive. Negotiable items include lender fees and title services; taxes and recording charges are not.

Down Payment and PMI at a Glance

The down payment table from the worked examples above, with the PMI consequence added, shows why the jump to 20% down is the most valuable step in home buying:

PMI at 0.75% of the loan per year adds roughly $225 to $300 a month at these loan sizes, on top of the higher P and I — so the true monthly saving from reaching 20% down is larger than the P and I column alone suggests. If 20% is out of reach, some buyers use gift funds, down-payment assistance programs, or a smaller first home to get there sooner rather than later.

Extra Payments: Three Ways to Cut Years Off

Extra payments are the most flexible way to cut mortgage interest, because unlike a shorter term, they can be paused in a bad month without penalty. Three approaches cover nearly every situation.

1. A fixed extra amount every month. Adding $200 a month to a typical 30-year loan pays it off several years early and saves tens of thousands in interest. It is the simplest habit and the easiest to automate.
2. One extra payment a year. Paying biweekly (half the monthly payment every two weeks) produces 26 half-payments a year — one full extra monthly payment annually — with almost no budgeting pain. Confirm the servicer applies the extra to principal rather than holding it.
3. Lump sums when they arrive. Bonuses, tax refunds, and windfalls paid against principal early in the loan save the most, because they cut interest on every remaining month. Even a single $5,000 lump sum in year two saves far more than the same amount paid in year twenty.

Before paying extra, confirm two things in writing: that extra payments go to principal, and that no prepayment penalty applies. Then use the extra-payment field in the calculator to see your own payoff date and interest saved — the numbers are usually persuasive enough to keep the habit going.

Buying vs Renting: The Honest Comparison

Buying is not automatically better than renting, and the honest comparison counts costs both sides hide. Renting’s monthly figure is usually the whole housing bill; buying’s monthly figure excludes maintenance, repairs, and the opportunity cost of the down payment. Over short stays, those extras plus closing costs on both ends usually make renting cheaper. Over long stays, buying usually wins, because the payment stays fixed while rents rise, and each payment builds equity.

• Stay length decides it. Under about five years, buying rarely wins after closing costs, selling costs, and the slow early amortization. Over ten years, buying usually wins comfortably.
• Count maintenance. Budget 1% to 2% of home value per year for upkeep. On a $350,000 home, that is $3,500 to $7,000 a year that renters never pay.
• Count the down payment’s alternative. Money tied up in a home is not invested elsewhere. The compound interest calculator shows what the same deposit could grow to — the fair comparison includes that forgone growth.
• Count flexibility. Renting lets you move for a job or a life change at low cost. Owning ties you to a market, and selling takes months and several percent in fees.
• Count stability. A fixed-rate mortgage payment never rises with the rental market, and ownership ends with an asset. For households that stay put, that stability is worth real money.

Run both sides with real local numbers — actual rents, actual tax and insurance, actual maintenance — rather than rules of thumb. The calculator above gives the buying side; a rental listing gives the other.

Frequently Asked Questions

Why is my real payment higher than the P&I figure?

Because taxes, insurance, PMI, and HOA are collected with the mortgage payment through escrow. P&I is only the loan portion; PITI is the whole bill.

Does PMI last the whole loan?

No. It normally ends once you reach 20–22% equity, either through payments or home appreciation. Ask your servicer about the exact threshold and request removal when you qualify.

Is a 15-year mortgage always better?

Financially it saves the most interest, but the higher payment raises risk if income drops. A 30-year loan with voluntary extra payments gives similar savings with more flexibility.

What credit score do I need?

Conventional loans typically want 620 or above, with better rates at 740+. FHA loans accept lower scores with a smaller down payment but add mortgage insurance premiums.

Should I pay points to lower the rate?

Paying discount points (1 point = 1% of the loan) lowers your rate. It pays off only if you stay in the home past the break-even point — divide the points cost by the monthly saving to find it in months.

What is escrow and why does my payment change?

Escrow is the account your servicer uses to hold your tax and insurance money and pay those bills for you. Your payment changes when tax assessments or insurance premiums change, even if your loan rate never moves — the servicer recalculates the escrow portion each year and adjusts your monthly amount to cover it.

Can I get a mortgage with no down payment?

In the US, yes, through specific programs: VA loans for eligible veterans and USDA loans in qualifying rural areas both allow 0% down. Conventional and FHA loans require a down payment, though FHA can be as low as 3.5%. Zero-down loans mean a larger loan, higher payments, and PMI or equivalent fees, so compare the total monthly cost carefully.

What happens if I pay my mortgage late?

A grace period (often 15 days) usually applies before a late fee is charged, but the payment is still reported late to credit bureaus if it goes 30 days past due. Repeated late payments damage credit, raise future borrowing costs, and can trigger default proceedings if they continue. If trouble is coming, call the servicer before missing a payment — forbearance and modification options exist, but they are much easier to arrange early.

Can I remove PMI without refinancing?

Yes, usually. PMI normally ends automatically at 78% of the original value, and you can usually request cancellation at 80% equity based on the original value or a new appraisal if the home has appreciated. A new appraisal costs a few hundred dollars but can remove PMI years early in a rising market — ask your servicer for the exact process and thresholds.

How much should I save before buying?

Beyond the down payment, aim for closing costs (2% to 5% of the loan), moving costs, and three to six months of total housing payments as an emergency reserve after closing. Buyers who empty every account at closing are one broken furnace away from debt — the reserve is part of the purchase price, not an optional extra.

Disclaimer: This calculator provides estimates for general information only and is not mortgage or financial advice. Actual payments depend on your lender, credit, taxes, and insurance. Consult a mortgage adviser before buying.