Mortgage Calculator
Estimate your monthly payments with taxes and insurance
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Estimated Monthly Payment
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Principal & Interest
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Property Tax
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Home Insurance
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HOA Fees
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Loan Amount: $0.00
How to Calculate Your Mortgage Payments
Understanding your mortgage payment is the first step toward homeownership. While the sticker price of a home tells part of the story, your actual monthly obligation involves several components that can significantly affect your budget.
The Components of a Mortgage Payment (PITI)
Lenders often refer to your monthly payment as PITI, which stands for Principal, Interest, Taxes, and Insurance.
- Principal: The portion of your payment that goes toward paying down the loan balance. In the early years of a 30-year mortgage, this amount is small but grows over time.
- Interest: The fee you pay the bank for borrowing money. This usually makes up the bulk of your payment in the beginning of the loan term.
- Taxes: Property taxes assessed by your local government. Lenders typically collect this monthly and hold it in an escrow account to pay the bill annually.
- Insurance: Homeowner's insurance protects your property against damage. Like taxes, this is often escrowed.
How Interest Rates Affect Your Buying Power
Even a small fluctuation in interest rates can drastically change your monthly payment. For example, on a $350,000 loan, the difference between a 6% and a 7% interest rate can add hundreds of dollars to your monthly costs and tens of thousands over the life of the loan. Use the calculator above to test different rate scenarios to see what fits your budget.
What About HOA Fees?
If you are buying a condo or a home in a managed community, you will likely pay Homeowners Association (HOA) fees. While these are usually paid directly to the association rather than the lender, they are a critical part of your monthly housing expense and affect your debt-to-income ratio (DTI) during the loan approval process.
Frequently Asked Questions
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The standard mortgage payment formula is M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1], where P is the principal loan amount, i is the monthly interest rate, and n is the total number of months in the loan term.
Does this calculator include PMI?
This calculator focuses on PITI and HOA. If your down payment is less than 20%, you may also be required to pay Private Mortgage Insurance (PMI), which typically costs between 0.5% and 1% of the loan amount annually.
What is a good debt-to-income ratio for a mortgage?
Most lenders prefer a back-end debt-to-income (DTI) ratio of 43% or lower, meaning your total monthly debt payments (including your new mortgage) should not exceed 43% of your gross monthly income.