Calculate your estimated monthly mortgage payment, including principal, interest, taxes, and insurance (PITI).
Mortgage Payment Calculator
The total amount you are borrowing.
The yearly interest rate for your loan.
The total duration of the loan in years.
Estimated yearly property taxes.
Estimated yearly homeowner's insurance premium.
If applicable (typically for down payments < 20%).
Your Estimated Monthly Mortgage Payment (PITI)
Monthly Principal & Interest
Monthly Taxes & Insurance
Total Monthly PITI
Formula: M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1] + (T+I+PMI)/12
Where M = Monthly Payment, P = Principal Loan Amount, i = Monthly Interest Rate, n = Total Number of Payments, T = Annual Property Tax, I = Annual Homeowner's Insurance, PMI = Monthly PMI.
Mortgage Payment Breakdown
Monthly Payment Allocation Over Time
Amortization Schedule (First 12 Months)
First Year Amortization
Month
Starting Balance
Payment
Principal
Interest
Ending Balance
What is a Mortgage Payment?
A mortgage payment is the regular amount of money a borrower pays to a lender to repay a home loan. It's typically paid monthly and is a crucial part of homeownership. Understanding your mortgage payment is essential for budgeting and financial planning. This calculator helps you estimate your total monthly mortgage obligation, often referred to as PITI: Principal, Interest, Taxes, and Insurance. Many homeowners also pay Private Mortgage Insurance (PMI) if their down payment is less than 20% of the home's purchase price.
Who should use this calculator? Anyone considering buying a home, refinancing an existing mortgage, or simply wanting to understand the costs associated with homeownership. It's invaluable for first-time homebuyers trying to gauge affordability and for existing homeowners looking to understand how changes in interest rates or property taxes might affect their payments.
Common misconceptions about mortgage payments:
Myth: The monthly payment is just principal and interest. Reality: For most borrowers, the payment includes property taxes and homeowner's insurance, and potentially PMI.
Myth: Interest rates are fixed for the life of the loan. Reality: While fixed-rate mortgages have a constant interest rate, adjustable-rate mortgages (ARMs) can change over time.
Myth: A lower interest rate always means a lower payment. Reality: While a lower rate significantly reduces costs, the loan term and amount also play major roles. A longer term can lower monthly payments but increase total interest paid.
Mortgage Payment Formula and Mathematical Explanation
The standard formula for calculating the monthly mortgage payment (Principal & Interest) is the annuity formula. When we add other costs like taxes, insurance, and PMI, we get the total PITI payment.
Principal & Interest (P&I) Formula:
The core formula for the monthly payment (M) of a loan is:
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 rate divided by 12)
n = The total number of payments over the loan's lifetime (loan term in years multiplied by 12)
Total Monthly Payment (PITI):
To get the full picture, we add the monthly costs of property taxes, homeowner's insurance, and PMI:
Total Monthly PITI = M + (T / 12) + (I / 12) + PMI
Sarah is buying her first home. She's found a property for $400,000 and plans to make a 10% down payment ($40,000). She qualifies for a 30-year fixed-rate mortgage at 6.5% interest. Her estimated annual property taxes are $4,800, and annual homeowner's insurance is $1,500. Since her down payment is less than 20%, she'll also have PMI, estimated at $150 per month.
Financial Interpretation: Sarah can see that her total monthly housing cost will be around $2,951. This helps her determine if this home fits her budget, considering her income and other expenses. She knows that PMI will be removed once she reaches 20% equity.
Example 2: Refinancing a Mortgage
John and Jane have an existing mortgage balance of $250,000 on a 15-year loan they took out 5 years ago at 4.5% interest. They are considering refinancing to a new 30-year loan at 5.5% interest to lower their monthly payments and potentially take cash out. Their current annual property taxes are $3,000, and insurance is $1,000. They don't expect PMI on the refinance.
Financial Interpretation: Their previous P&I payment was likely higher (around $1,930 for the 15-year loan). The new P&I payment is lower at ~$1,419. The total PITI is ~$1,836. This lower monthly payment provides more cash flow, but they need to consider that they will be paying interest for a longer period (30 years vs. the remaining 10 years on their old loan), potentially increasing the total interest paid over the life of the loan. This is a key trade-off in refinancing decisions.
How to Use This Mortgage Calculator
Our mortgage calculator is designed for simplicity and accuracy. Follow these steps to get your estimated monthly mortgage payment:
Enter Loan Amount: Input the total amount you plan to borrow. This is usually the home's purchase price minus your down payment.
Input Annual Interest Rate: Enter the yearly interest rate offered by your lender. Ensure you use the percentage (e.g., 6.5 for 6.5%).
Specify Loan Term: Enter the duration of the loan in years (commonly 15 or 30 years).
Add Property Taxes: Input your estimated *annual* property taxes. If you don't know this, research typical rates in your desired area or ask a real estate agent.
Add Homeowner's Insurance: Input your estimated *annual* homeowner's insurance premium. Shop around for quotes to get an accurate estimate.
Include Monthly PMI (If Applicable): If your down payment is less than 20%, enter your estimated monthly PMI cost.
Click 'Calculate Payment': The calculator will instantly display your estimated monthly mortgage payment, broken down into P&I, Taxes & Insurance, and PMI.
How to Read Results:
Main Result (PITI): This is your total estimated monthly housing expense. It's the most critical number for budgeting.
Monthly Principal & Interest: This is the portion that goes towards paying down your loan balance and the interest charged by the lender.
Monthly Taxes & Insurance: This is the sum of your monthly property tax and homeowner's insurance payments, often collected by the lender in an escrow account.
Chart: The chart visually breaks down the P&I portion of your payment and how it changes over time, showing the shift from interest-heavy to principal-heavy payments.
Amortization Table: This table shows month-by-month how your payment is applied to principal and interest and how your loan balance decreases.
Decision-Making Guidance:
Use the results to assess affordability. Can you comfortably afford the total PITI payment each month? Compare payments for different loan terms (e.g., 15 vs. 30 years) to see the trade-off between lower monthly payments and higher total interest paid. Use this tool in conjunction with your overall budget and mortgage pre-approval to make informed decisions.
Key Factors That Affect Mortgage Payment Results
Several elements significantly influence your calculated mortgage payment. Understanding these factors is key to grasping your true housing costs and affordability.
Loan Amount (Principal):
This is the most direct factor. A larger loan amount means a higher monthly payment, assuming all other variables remain constant. It's directly tied to the home's purchase price and your down payment size.
Interest Rate:
The interest rate is a critical driver of your monthly payment, especially the Principal & Interest (P&I) portion. Even a small difference in the annual interest rate can lead to substantial changes in your monthly payment and the total interest paid over the life of the loan. Higher rates mean higher P&I payments.
Loan Term (Duration):
The length of the loan (e.g., 15, 30 years) directly impacts the monthly payment amount. A longer term (like 30 years) results in lower monthly payments because the principal is spread over more payments. However, it also means you'll pay significantly more interest over the life of the loan compared to a shorter term (like 15 years).
Property Taxes:
These are local government taxes based on your property's assessed value. They are usually included in your monthly mortgage payment via an escrow account. Higher property taxes directly increase your total PITI payment. Tax rates vary significantly by location.
Homeowner's Insurance:
This covers potential damage to your home and liability. Premiums depend on coverage levels, location (risk factors like floods or hurricanes), and the value of your home. Higher insurance costs increase your PITI payment.
Private Mortgage Insurance (PMI):
If your down payment is less than 20% of the home's purchase price, lenders typically require PMI. This protects the lender if you default. PMI adds a monthly cost to your payment, which can be substantial depending on the loan amount and your creditworthiness. It's usually removed once you reach 20% equity.
Escrow Account Fees:
While not a direct cost of the loan itself, lenders often charge a small fee for managing the escrow account (where taxes and insurance payments are held). This can slightly increase the overall monthly outlay.
Additional Loan Fees (Points, Origination Fees):
While not part of the recurring monthly payment calculation shown here, upfront fees like discount points (paid to lower the interest rate) or origination fees can increase the total cost of obtaining the mortgage. Some calculators might incorporate these into an 'APR' calculation, but they don't typically alter the base PITI payment.
Frequently Asked Questions (FAQ)
Q: What is the difference between P&I and PITI?
A: P&I stands for Principal and Interest, which is the core part of your mortgage payment that pays down the loan balance and covers the lender's interest charges. PITI is the total monthly payment, including Principal, Interest, Property Taxes, and Homeowner's Insurance (and potentially PMI). PITI is the figure you should focus on for budgeting.
Q: How does the loan term affect my monthly payment?
A: A longer loan term (e.g., 30 years) results in lower monthly payments because the cost is spread out over more time. However, you'll pay significantly more interest over the life of the loan. A shorter term (e.g., 15 years) means higher monthly payments but less total interest paid.
Q: When can I remove PMI from my mortgage?
A: PMI can typically be removed once your loan-to-value (LTV) ratio reaches 80% (meaning you have 20% equity in your home). By law, lenders must automatically terminate PMI when your LTV reaches 78%, provided you are current on your payments.
Q: Can I use this calculator for an Adjustable-Rate Mortgage (ARM)?
A: This calculator provides an estimate based on a fixed interest rate. For ARMs, the initial payment might be accurate, but future payments could change based on market interest rate fluctuations. You would need to consult your ARM disclosure for projected payment changes.
Q: What if my property taxes or insurance costs change annually?
A: This calculator uses the annual figures you input. If your taxes or insurance premiums increase or decrease significantly year over year, your actual PITI payment will adjust accordingly. Lenders typically recalculate escrow amounts annually.
Q: How accurate is this mortgage calculator?
A: This calculator provides a highly accurate estimate for the PITI payment based on the standard mortgage formula. However, it's an estimate. Your actual final mortgage payment may vary slightly due to lender-specific fees, exact calculation methods, or rounding differences.
Q: What are discount points?
A: Discount points are fees paid directly to the lender at closing in exchange for a reduced interest rate. One point typically costs 1% of the loan amount and can lower the interest rate by a fraction of a percent. While they don't change the monthly payment formula directly, they reduce the interest rate 'i', thus lowering the P&I payment and total interest paid.
Q: Should I aim for the lowest monthly payment or the lowest total interest paid?
A: This depends on your financial goals and situation. If you need the lowest possible monthly cash outflow for affordability, a longer term (like 30 years) with a higher total interest cost might be necessary. If you can afford higher monthly payments and want to save money long-term, a shorter term (like 15 years) is usually better.