Mortgage Payment Calculator
Total Monthly Payment
Payment Breakdown
Understanding Your Mortgage Calculation
Purchasing a home is likely the largest financial commitment you will make in your lifetime. Using a comprehensive Mortgage Payment Calculator is the first step in understanding exactly what you can afford. This tool breaks down your monthly financial obligation, moving beyond just the sticker price of the home to reveal the true cost of ownership.
The PITI Formula
Mortgage lenders often refer to your monthly payment as PITI, which stands for Principal, Interest, Taxes, and Insurance. It is crucial to calculate all four components to avoid surprises:
- Principal: The portion of your payment that goes toward paying down the loan balance (the home price minus your down payment).
- Interest: The cost of borrowing money, determined by your interest rate and remaining loan balance. In the early years of a mortgage, the majority of your payment goes toward interest.
- Taxes: Property taxes are usually collected by your lender in an escrow account and paid annually to your local government. These can vary significantly by location.
- Insurance: Homeowners insurance protects your property against damage. Like taxes, this is often bundled into your monthly payment.
How Interest Rates Affect Your Payment
Even a small fluctuation in interest rates can have a massive impact on your monthly payment and the total cost of the loan. For example, on a $300,000 loan, a 1% difference in interest rate can change your monthly payment by hundreds of dollars and your total interest paid over 30 years by tens of thousands.
When using this calculator, try adjusting the Interest Rate field to see how refinancing or shopping for a better rate could save you money in the long run.
Why Down Payment Matters
Your down payment directly reduces the principal amount you need to borrow. A larger down payment (typically 20% or more) serves two main purposes:
- It lowers your monthly principal and interest payment.
- It often eliminates the need for Private Mortgage Insurance (PMI), an extra cost lenders charge borrowers with smaller down payments.
Use the Down Payment field above to simulate different savings scenarios and see how they impact your monthly budget.
HOA Fees and Hidden Costs
If you are buying a condo or a home in a planned community, you must account for Homeowners Association (HOA) fees. While these fees do not pay down your loan, they are a mandatory monthly expense that lenders count against your debt-to-income ratio. Our calculator includes a specific field for HOA fees to ensure your budget is accurate.