Mortgage Payment Calculator
Estimate your monthly mortgage payments with taxes, insurance, and PMI included. Use this tool to plan your home purchase budget effectively by adjusting home price, down payment, and interest rates.
Understanding Your Mortgage Payment
When you take out a mortgage loan to buy a house, your monthly payment is typically composed of four main parts, often referred to as PITI: Principal, Interest, Taxes, and Insurance. Understanding how these components interact is crucial for determining how much home you can afford.
1. Principal
The principal is the money you borrowed. Part of every monthly payment goes toward paying back this balance. In the early years of a mortgage, the percentage of your payment that goes toward principal is small, but it increases over time as the interest portion decreases.
2. Interest
Interest is the cost of borrowing money. This is paid to the lender as a fee. Higher interest rates significantly increase your monthly payment and the total cost of the loan over time. Our calculator uses the standard amortization formula to determine exactly how much interest you pay based on your rate and loan term.
3. Property Taxes
Property taxes are assessed by your local government to fund public services like schools, police, and road maintenance. Lenders typically collect this money as part of your monthly payment and hold it in an escrow account to pay the tax bill when it's due. The calculator estimates the monthly portion by dividing your annual tax bill by 12.
4. Homeowners Insurance
Lenders require you to carry homeowners insurance to protect the property against damage from fire, storms, and other hazards. Like property taxes, this is usually collected monthly and held in escrow.
How Interest Rates Affect Affordability
Even a small change in interest rates can have a massive impact on your purchasing power. For example, on a $300,000 loan, the difference between a 6% and a 7% interest rate can increase your monthly payment by nearly $200 and cost you tens of thousands of dollars over the life of the loan. It is always recommended to shop around with multiple lenders to secure the best rate possible.
Calculated Breakdown
This tool calculates the fully amortized monthly payment. This means that if you make every payment on time for the duration of the loan term (e.g., 30 years), the loan will be completely paid off. The formula used accounts for compounding interest monthly, ensuring accuracy for standard U.S. fixed-rate mortgages.