Includes Principal, Interest, Taxes, and Insurance.
Understanding Your Mortgage Payment (PITI)
When you take out a mortgage to buy a home, your monthly payment typically consists of more than just the principal and interest repayment. Lenders often collect funds for property taxes and homeowner's insurance on your behalf and hold them in an escrow account. This package of payments is known as PITI: Principal, Interest, Taxes, and Insurance. Our calculator helps you estimate this total monthly obligation, giving you a more realistic picture of homeownership costs.
How the Calculation Works:
The calculation involves several components:
Principal & Interest (P&I): This is the core of your mortgage payment. It's calculated using a standard mortgage payment formula:
M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1]
Where:
M = Your total monthly mortgage payment (Principal & Interest)
P = The principal loan amount (the amount you borrow)
i = Your monthly interest rate (annual interest rate divided by 12)
n = The total number of payments over the loan's lifetime (loan term in years multiplied by 12)
Property Taxes: This calculator takes your annual property tax amount and divides it by 12 to determine the monthly contribution needed for your escrow account.
Monthly Property Tax = Annual Property Tax / 12
Homeowner's Insurance: Similar to property taxes, your annual homeowner's insurance premium is divided by 12 to calculate the monthly escrow contribution.
Monthly Home Insurance = Annual Home Insurance / 12
Private Mortgage Insurance (PMI): If your down payment is less than 20% of the home's purchase price, lenders typically require PMI. This monthly premium is added to your total payment. If it's not applicable, you can enter 0.
The final estimated monthly payment is the sum of these four components:
Total Monthly Payment = P&I + Monthly Property Tax + Monthly Home Insurance + Monthly PMI
Why This Matters:
Understanding the full PITI payment is crucial for several reasons:
Budgeting: It provides a comprehensive view of your housing expenses, enabling more accurate financial planning.
Affordability: Helps determine how much home you can realistically afford by factoring in all associated costs, not just the loan repayment.
Loan Qualification: Lenders use PITI to assess your debt-to-income ratio, which is a key factor in loan approval.
Use this calculator to get a clearer picture of your potential monthly mortgage obligations. Remember that this is an estimate, and actual costs may vary. Consult with a mortgage professional for personalized advice.
function calculateMortgage() {
var principal = parseFloat(document.getElementById("loanAmount").value);
var annualInterestRate = parseFloat(document.getElementById("annualInterestRate").value);
var loanTermYears = parseFloat(document.getElementById("loanTerm").value);
var annualPropertyTax = parseFloat(document.getElementById("annualPropertyTax").value);
var annualHomeInsurance = parseFloat(document.getElementById("annualHomeInsurance").value);
var monthlyPMI = parseFloat(document.getElementById("monthlyPrivateMortgageInsurance").value);
var resultDiv = document.getElementById("result");
var monthlyPaymentSpan = document.getElementById("result-monthly-payment");
if (isNaN(principal) || isNaN(annualInterestRate) || isNaN(loanTermYears) || isNaN(annualPropertyTax) || isNaN(annualHomeInsurance)) {
monthlyPaymentSpan.textContent = "Invalid Input";
monthlyPaymentSpan.style.color = "red";
resultDiv.style.borderColor = "red";
return;
}
// Ensure PMI is treated as 0 if not provided or invalid
if (isNaN(monthlyPMI)) {
monthlyPMI = 0;
}
// Calculate monthly interest rate
var monthlyInterestRate = annualInterestRate / 100 / 12;
// Calculate total number of payments
var numberOfPayments = loanTermYears * 12;
var principalAndInterest = 0;
if (monthlyInterestRate > 0) {
principalAndInterest = principal * (monthlyInterestRate * Math.pow(1 + monthlyInterestRate, numberOfPayments)) / (Math.pow(1 + monthlyInterestRate, numberOfPayments) – 1);
} else {
// Handle 0% interest rate scenario
principalAndInterest = principal / numberOfPayments;
}
// Calculate monthly property tax and insurance
var monthlyPropertyTax = annualPropertyTax / 12;
var monthlyHomeInsurance = annualHomeInsurance / 12;
// Calculate total monthly payment
var totalMonthlyPayment = principalAndInterest + monthlyPropertyTax + monthlyHomeInsurance + monthlyPMI;
// Format the result
monthlyPaymentSpan.textContent = "$" + totalMonthlyPayment.toFixed(2);
monthlyPaymentSpan.style.color = "#28a745"; // Success Green
resultDiv.style.borderColor = "#28a745";
}