Monthly Principal & Interest:
$0.00
Monthly Property Tax:
$0.00
Monthly Home Insurance:
$0.00
Total Monthly Payment:
$0.00
Total Interest Over Loan: $0.00
Understanding Your Mortgage Calculation
Calculating your monthly mortgage payment is the first step in determining home affordability. This comprehensive Mortgage Payment Calculator helps you estimate not just the principal and interest, but also the "hidden" costs like property taxes and homeowners insurance (PITI).
How the Mortgage Formula Works
The core calculation determines your monthly Principal and Interest (P&I) payment. This is based on three primary factors:
- Principal: The loan amount, calculated as the Home Price minus your Down Payment.
- Interest Rate: The annual percentage rate charged by the lender. Even a small difference (e.g., 6.0% vs 6.5%) can significantly impact your monthly obligation and total interest paid over 30 years.
- Loan Term: The duration of the loan. A 30-year term offers lower monthly payments, while a 15-year term saves massive amounts in interest but requires higher monthly outlays.
The Impact of Escrow Costs
Many first-time homebuyers focus solely on the loan repayment and forget about Escrow items. Lenders often require you to pay 1/12th of your annual property taxes and home insurance premiums each month along with your mortgage. This calculator adds these specific annual costs to give you a realistic "Total Monthly Payment" figure.
Optimizing Your Down Payment
Putting 20% down (e.g., $90,000 on a $450,000 home) is the industry standard to avoid Private Mortgage Insurance (PMI). While this calculator focuses on PITI, remember that if your down payment is less than 20%, you may need to budget an additional 0.5% to 1% of the loan amount annually for PMI until you reach 20% equity.