Mortgage Payment Calculator
How to Use This Mortgage Calculator
Purchasing a home is likely the largest financial decision you will make. This Mortgage Payment Calculator helps you estimate your monthly housing costs by factoring in the home price, your down payment, interest rates, and additional costs like property taxes and homeowners insurance.
Understanding Your Monthly Payment
Your total monthly mortgage payment is typically composed of four main parts, often referred to as PITI:
- Principal: The portion of your payment that goes toward paying down the original amount you borrowed.
- Interest: The cost of borrowing money, paid to the lender.
- Taxes: Property taxes assessed by your local government, usually collected by the lender in an escrow account.
- Insurance: Homeowners insurance to protect the property against damage, also often paid via escrow.
How the Calculation Works
This calculator uses the standard amortization formula to determine the Principal and Interest (P&I). It then divides your annual property tax and insurance estimates by 12 to add the monthly escrow amounts. This gives you a realistic view of the check you will write every month.
Factors Affecting Your Mortgage
Down Payment: Putting more money down reduces the loan amount (Principal), which lowers your monthly payment and the total interest paid over the life of the loan. A down payment of 20% or more also typically eliminates the need for Private Mortgage Insurance (PMI).
Loan Term: A 30-year term is standard, offering lower monthly payments but higher total interest costs. A 15-year term has higher monthly payments but significantly reduces the total interest paid.
Interest Rate: Even a small difference in interest rates can impact your monthly payment by hundreds of dollars and your total loan cost by tens of thousands. Your rate is influenced by your credit score, the loan type, and current market conditions.
Frequently Asked Questions
Does this calculator include PMI?
This specific tool focuses on PITI (Principal, Interest, Taxes, Insurance). If your down payment is less than 20% of the home price, lenders usually require Private Mortgage Insurance (PMI), which typically costs between 0.5% and 1% of the loan amount annually. You should budget extra for this if you are making a small down payment.
How accurate are the tax and insurance estimates?
Property taxes vary widely by county and state. The default value is an estimate. For precision, check your local tax assessor's website for the property's specific tax history. Similarly, insurance quotes depend on the home's age, location, and coverage needs.