Monthly Mortgage Payment Calculator
Estimate your monthly payments including Principal, Interest, Taxes, and Insurance (PITI).
Payment Breakdown
Understanding Your Mortgage Payment (PITI)
When calculating mortgage affordability, it is crucial to look beyond just the principal and interest. Lenders use a formula often referred to as PITI to determine your total monthly obligation. This calculator helps you estimate the full cost of homeownership by breaking down these four components.
1. Principal
This is the portion of your payment that goes toward paying down the loan balance (the amount you borrowed). In the early years of a 30-year fixed mortgage, the principal portion is small, but it grows over time as the interest portion decreases.
2. Interest
Interest is the cost of borrowing money. It is calculated based on your remaining loan balance and your annual interest rate. A higher interest rate significantly increases your monthly payment and the total cost of the loan over time.
3. Taxes
Property taxes are assessed by your local government to fund public services like schools and roads. These are usually paid annually, but most lenders divide the annual amount by 12 and collect it monthly in an escrow account.
4. Insurance
Homeowners insurance protects your property against damage from fire, theft, and storms. Like property taxes, the annual premium is typically divided into monthly installments and included in your mortgage payment.
How Interest Rates Affect Buying Power
Even a small change in interest rates can have a massive impact on your monthly payment. For example, on a $300,000 loan, the difference between a 6% and a 7% interest rate is roughly $200 per month. Use the calculator above to test different rate scenarios to see how they fit your budget.
Don't Forget HOA Fees
If you are buying a condo or a home in a planned community, you may have to pay Homeowners Association (HOA) fees. While these are usually paid directly to the association and not the lender, they are a mandatory monthly cost that lenders consider when calculating your Debt-to-Income (DTI) ratio.