Mortgage Payment Calculator
Calculate your estimated monthly house payment including taxes and insurance.
Principal & Interest:
Monthly Property Tax:
Monthly Insurance:
Total Monthly Payment:
Understanding Your Mortgage Payment Calculation
When you are shopping for a new home, understanding the components of your monthly mortgage payment is crucial for budgeting. A mortgage is likely the largest financial commitment you'll make, and the "sticker price" of the home is only one part of the equation.
The Components of a Mortgage Payment (PITI)
Most monthly mortgage payments consist of four main parts, often referred to as PITI:
- Principal: The amount that goes toward paying down the actual balance of the loan.
- Interest: The cost paid to the lender for borrowing the money.
- Taxes: Real estate or property taxes charged by your local government, usually held in an escrow account.
- Insurance: This includes homeowners insurance and, if your down payment is less than 20%, Private Mortgage Insurance (PMI).
How This Mortgage Calculator Works
To use this tool effectively, you should enter realistic numbers based on your local market. For example, a standard 30-year fixed-rate mortgage is the most common loan term in the United States, but you might also consider a 15-year term to save on interest costs.
Realistic Example:
If you purchase a home for $400,000 with a 20% down payment ($80,000) at a 6.5% interest rate for 30 years:
- Your Loan Amount would be $320,000.
- Your Principal and Interest payment would be approximately $2,022.62.
- Adding $400 for taxes and $100 for insurance brings your total monthly commitment to $2,522.62.
Factors That Influence Your Rates
Several factors determine the interest rate you'll receive from a lender. These include your credit score, your debt-to-income (DTI) ratio, the location of the property, and the size of your down payment. Generally, a higher credit score and a larger down payment will secure a lower interest rate, reducing your monthly payment and the total interest paid over the life of the loan.
Tips to Lower Your Monthly Payment
If the calculated result is higher than your budget allows, consider these strategies:
- Increase your down payment: This reduces the loan principal and may eliminate the need for PMI.
- Shop for a lower rate: Even a 0.5% difference in interest rate can save you tens of thousands of dollars over 30 years.
- Consider a different location: Property tax rates vary significantly by county and state.
- Extend the loan term: Moving from a 15-year to a 30-year loan will lower the monthly payment, though you will pay more in total interest.