What is a mortgage payment
A mortgage payment is the amount you pay your lender each month to repay a home loan. Most monthly payments have four parts, often abbreviated as PITI: principal (the loan balance you are paying down), interest (the cost of borrowing), property taxes, and homeowners insurance. This calculator estimates your full PITI payment from six inputs: home price, down payment, interest rate, loan term, annual property tax, and annual insurance.
Understanding the full payment matters because taxes and insurance routinely add 15 to 25 percent on top of principal and interest. A loan that looks affordable on principal and interest alone can strain a budget once the escrow portion is included.
How to use the mortgage calculator
- Enter the home price you expect to pay.
- Enter your down payment in dollars, or use the 5%, 10%, or 20% preset buttons.
- Enter the annual interest rate quoted by your lender.
- Choose a loan term of 15, 20, or 30 years.
- Enter your estimated annual property tax and homeowners insurance.
- Review the monthly payment breakdown, total interest, and total cost.
How the monthly payment is calculated
The principal and interest portion uses the standard amortization formula used by lenders:
M = P × [ r(1 + r)ⁿ ] / [ (1 + r)ⁿ − 1 ]
Where:
- M is the monthly principal and interest payment
- P is the loan principal (home price minus down payment)
- r is the monthly interest rate (annual rate divided by 12)
- n is the total number of monthly payments (loan term in years × 12)
Property tax and insurance are divided by 12 and added to the result to produce the full monthly payment.
Worked example
Suppose you buy a $400,000 home with $80,000 (20%) down at 6.5% for 30 years, with $3,600 annual property tax and $1,200 annual insurance:
| Component | Value |
|---|---|
| Loan principal (P) | $320,000 |
| Monthly rate (r) | 6.5% ÷ 12 = 0.005417 |
| Number of payments (n) | 30 × 12 = 360 |
| Principal and interest | $2,022.62 |
| Property tax (monthly) | $300.00 |
| Insurance (monthly) | $100.00 |
| Total monthly payment | $2,422.62 |
Over the full 30-year term, this loan costs about $408,142 in interest — more than the original principal. This is why comparing rates and terms before committing matters so much.
How the down payment changes your loan
The down payment reduces the amount you borrow, which lowers every monthly payment for the life of the loan.
The 20 percent threshold
Putting at least 20% down on a conventional loan typically lets you avoid private mortgage insurance (PMI), which usually costs 0.3% to 1.5% of the loan balance per year. Below 20%, PMI is added to your payment until you reach roughly 20% equity. This calculator does not include PMI, so if your down payment is under 20%, expect your real payment to be somewhat higher than the estimate.
Smaller down payments
FHA loans allow as little as 3.5% down and VA loans can require nothing down for eligible borrowers, but both carry their own insurance or funding fees. A smaller down payment means a larger principal, more total interest, and a higher monthly payment.
Choosing between 15, 20, and 30 year terms
30-year term
The lowest monthly payment and the most budget flexibility, at the cost of the highest total interest and a slightly higher rate than shorter terms.
20-year term
A middle ground: meaningfully less total interest than a 30-year loan with a payment increase that many budgets can absorb.
15-year term
The highest monthly payment but typically the lowest rate, and total interest often less than half that of a comparable 30-year loan. Using the example above, the same $320,000 loan at 6.0% over 15 years costs about $166,000 in interest versus $408,000 over 30 years at 6.5%.
What lenders look at beyond the payment
The calculator tells you what a loan costs; lenders decide what you qualify for using ratios like:
- Front-end ratio: your full housing payment (PITI) divided by gross monthly income. Lenders generally prefer this under 28%.
- Back-end ratio (DTI): all monthly debt payments divided by gross monthly income, generally preferred under 36%, though many loans allow more.
- Credit score: higher scores unlock lower rates. On a $320,000 loan, a half-point rate difference changes the payment by roughly $100 per month.
FAQ
Does this calculator include PMI?
No. Private mortgage insurance applies to most conventional loans with less than 20% down and typically adds 0.3% to 1.5% of the loan balance per year. If you are putting down less than 20%, treat the result as a lower bound.
Why is my lender's quoted payment different?
Lender estimates may include PMI, HOA dues, or different tax and insurance escrow amounts. The principal and interest portion should match this calculator almost exactly for the same principal, rate, and term, since all lenders use the same amortization formula.
Should I use APR or the interest rate in this calculator?
Use the interest rate (the note rate). APR bundles closing costs and fees into a single comparison number and is useful for comparing offers, but monthly payments are computed from the note rate.
How much house can I afford?
A common starting point is keeping the full housing payment under 28% of gross monthly income. Work backwards: multiply your gross monthly income by 0.28, subtract monthly taxes and insurance, then adjust the home price in the calculator until the principal and interest fits the remainder.
Is my data stored anywhere?
No. All calculations run entirely in your browser. Nothing you enter is sent to a server.