Finance
· Reviewed by Ali Abbas

Mortgage Calculator

How Monthly Mortgage Payments Are Calculated

Monthly mortgage payments use the standard amortization formula:

M = P × [r(1+r)ⁿ] ÷ [(1+r)ⁿ − 1]

Where: M = monthly payment, P = principal loan amount, r = monthly interest rate (annual rate ÷ 12), n = total number of payments (years × 12). For example: a $300,000 loan at 7% over 30 years → monthly payment ≈ $1,996.

What Is PITI?

PITI stands for Principal, Interest, Taxes, and Insurance — the four components of a complete monthly mortgage cost. Most lenders qualify borrowers based on total PITI relative to gross monthly income (typically PITI should not exceed 28–31% of gross income). Our calculator shows both your base P&I payment and your full PITI so you get a realistic, complete picture of what homeownership costs each month.

Understanding Your Mortgage Payment Breakdown

Each mortgage payment is split between principal (the amount reducing your loan balance) and interest (the cost of borrowing). Early in the loan, the vast majority of each payment goes toward interest. Over time, more shifts to principal — this gradual shift is defined by your amortization schedule.

On a 30-year mortgage, you might pay $200,000 in interest on top of a $200,000 principal — effectively purchasing your home twice over. This is why making extra principal payments in the early years can dramatically cut total interest paid and shorten your loan term.

Private Mortgage Insurance (PMI)

If your down payment is below 20% of the home's purchase price, most lenders require Private Mortgage Insurance (PMI). PMI protects the lender — not you — against default, and typically costs 0.5%–1.5% of the loan amount annually. On a $300,000 loan at 1%, that is $250/month added to your payment. PMI is generally cancelled automatically once your equity reaches 20%, though you may need to formally request its removal. Our calculator lets you set your exact PMI rate for precise estimates.

Fixed vs. Adjustable Rate Mortgages (ARM)

  • Fixed-rate mortgage: The interest rate is locked for the entire loan term. Your payment is stable and predictable. Ideal when rates are low or when you plan to stay in the home long-term.
  • Adjustable-rate mortgage (ARM): Starts with a lower fixed introductory rate (e.g., a 5/1 ARM is fixed for 5 years, then adjusts annually). Can save money in the short term but introduces payment uncertainty. Best if you plan to sell or refinance before the adjustment period begins.

15-Year vs. 30-Year Mortgage: Which Saves More?

A 15-year mortgage carries higher monthly payments but results in dramatically less total interest — often saving tens of thousands of dollars over the life of the loan. A 30-year mortgage lowers monthly payments and improves cash-flow flexibility, but costs far more in cumulative interest. Use this calculator to compare both scenarios with your actual numbers by switching the loan term dropdown.

Hidden Costs First-Time Buyers Often Miss

Beyond your PITI payment, budget for: closing costs (typically 2–5% of the loan amount), HOA fees where applicable, maintenance and repairs (plan for 1–2% of the home's value annually), utilities, and moving expenses. These costs can add hundreds of dollars per month beyond your mortgage payment and are essential to a realistic affordability assessment. Our calculator includes an HOA field to capture this cost.

How Your Credit Score Affects Your Mortgage Rate

Your credit score directly determines the interest rate you qualify for. Borrowers with scores above 760 typically receive the best available rates. Dropping from 760 to 680 can increase your rate by 0.5%–1.0% — which adds tens of thousands of dollars in total interest on a 30-year loan. Use the Rate Stress Test in our calculator to see exactly how a rate change affects your monthly payment before you apply.

How to Use

  1. 1
    Enter your loan detailsInput the home price, down payment amount (a live percentage badge shows your LTV instantly), annual interest rate, and loan term. Switch between 10, 15, 20, and 30-year terms to compare total costs.
  2. 2
    Add optional monthly costsEnter your annual property tax, homeowners insurance, monthly HOA fee, and adjust the PMI rate if you know your lender's exact figure. These populate a full PITI breakdown so there are no surprise costs.
  3. 3
    Review your full payment pictureSee your P&I payment, total PITI, loan amount, total interest, total loan cost, and estimated payoff date — all updating in real time. Check the Rate Stress Test to see how a +1% or +2% rate increase would affect your monthly cost, then expand the Amortization Schedule for a year-by-year breakdown.

Financial Disclaimer: Results are estimates only and should not be relied upon as financial or investment advice. Actual mortgage payments, rates, taxes, and insurance will vary based on your lender, location, and credit profile. Consult a licensed financial advisor or mortgage professional for guidance specific to your situation.

Frequently Asked Questions

How is my monthly mortgage payment calculated?
The monthly payment uses the standard amortization formula: M = P[r(1+r)^n] / [(1+r)^n − 1], where P = loan amount, r = monthly interest rate (annual rate ÷ 12), and n = total number of payments (years × 12). This produces a fixed payment that covers both interest and principal over the full loan term. This calculator applies that formula instantly as you type.
What does PITI mean and what does it include?
PITI stands for Principal, Interest, Taxes, and Insurance — the four core components of a complete monthly mortgage cost. Principal and interest make up the base loan payment. Taxes refer to annual property taxes divided into monthly escrow contributions. Insurance covers homeowners insurance (and PMI if applicable) also paid monthly. Lenders use your total PITI to assess affordability, typically requiring it stays below 28–31% of your gross monthly income.
How much down payment do I need?
A 20% down payment eliminates the requirement for Private Mortgage Insurance (PMI) and typically secures better rates. However, many lenders accept as little as 3–5% for conventional loans, and FHA loans allow as low as 3.5% for qualifying borrowers. VA and USDA loans can require 0% down for eligible applicants. A larger down payment means a smaller loan, lower monthly payments, less total interest paid, and immediate equity in the home.
What is PMI and when can I remove it?
Private Mortgage Insurance (PMI) is required by most lenders when your down payment is below 20% of the home's purchase price. It protects the lender — not you — in the event of default, and typically costs 0.5%–1.5% of the loan amount per year. Under the Homeowners Protection Act, lenders must automatically cancel PMI once your loan balance reaches 78% of the original home value (assuming you are current on payments). You can also request cancellation when your balance hits 80% LTV. PMI on FHA loans has different rules and may last the life of the loan.
15-year vs. 30-year mortgage — which is better?
A 15-year mortgage has significantly higher monthly payments but saves tens of thousands of dollars in total interest — often nearly half the total interest of a 30-year loan. A 30-year mortgage has lower monthly payments, providing more monthly cash-flow flexibility and a lower barrier to homeownership. The best choice depends on your income stability, savings goals, and how long you plan to stay in the home. Use this calculator to compare both terms side-by-side with your actual numbers.
Does this calculator include property tax and insurance?
Yes. Enter your annual property tax and annual homeowners insurance in the optional fields and the calculator adds them to your monthly PITI total. You can also include your monthly HOA fee for a complete cost picture. The base P&I card shows your principal and interest only, while the PITI card reflects the full monthly cost including all optional inputs. If you leave optional fields at zero, only P&I is calculated.
What happens if I make extra mortgage payments?
Extra payments applied to principal reduce your loan balance faster, shortening the loan term and cutting the total interest you pay. For example, adding $200/month to a $300,000 30-year mortgage at 7% can save over $60,000 in interest and pay off the loan roughly 5 years early. Even small, consistent extra payments in the early years — when the interest share of each payment is highest — produce the greatest long-term savings. Look for a dedicated extra payment calculator to model this precisely.
How does my credit score affect my mortgage rate?
Your credit score is one of the biggest factors lenders use to set your interest rate. Borrowers with scores above 760 typically qualify for the best available rates. A score between 700–759 may result in a rate 0.25%–0.5% higher, while a score of 650–699 can add 0.5%–1.0% or more. On a 30-year $300,000 loan, a 1% higher rate increases your total interest by approximately $60,000–$70,000. Use the Rate Stress Test in this calculator to see how a rate difference affects your monthly payment.
What are typical closing costs on a mortgage?
Closing costs generally range from 2% to 5% of the loan amount and are paid at the time of purchase, in addition to your down payment. Common items include loan origination fees, appraisal fees, title insurance, escrow fees, prepaid property taxes, prepaid homeowners insurance, and attorney fees where required. On a $350,000 loan, closing costs may range from $7,000 to $17,500. Some lenders offer no-closing-cost mortgages, but these typically roll the costs into a higher interest rate.
Can I use this calculator for a refinance?
Yes. To estimate a refinance payment, enter your current remaining loan balance as the Home Price, set the Down Payment to $0, input the new interest rate and term you are considering, and add your property tax and insurance. This gives you an accurate estimate of your new monthly payment. To find your refinance break-even point — how many months until the monthly savings offset closing costs — divide your estimated closing costs by your monthly savings.
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Formula & data source: Consumer Financial Protection Bureau (CFPB)