Mortgage Payment Calculator
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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Total Amount Paid Over Loan:
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Total Interest Paid:
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Understanding Your Mortgage Payments
Purchasing a home is likely the largest financial commitment you will make in your lifetime. Understanding how your mortgage payment is calculated is crucial for financial planning. This Mortgage Payment Calculator helps you estimate your monthly obligations by factoring in principal, interest, taxes, and insurance (often referred to as PITI).
Components of a Mortgage Payment (PITI)
Most mortgage payments are made up of four specific components:
- Principal: This is the portion of your payment that goes toward paying down the actual money you borrowed. In the early years of a loan, this amount is small, but it increases over time.
- Interest: This is the cost of borrowing money. With a standard amortization schedule, your early payments are primarily interest.
- Taxes: Property taxes are assessed by your local government. Lenders often collect this monthly and hold it in an escrow account to pay the bill when it's due.
- Insurance: Homeowners insurance protects your property against damage. Like taxes, this is often paid through an escrow account.
How Loan Term Affects Your Payment
The duration of your loan significantly impacts your monthly payment and the total interest paid. A 30-year fixed-rate mortgage is the most common, offering lower monthly payments but resulting in higher total interest costs over the life of the loan. Conversely, a 15-year mortgage will have higher monthly payments, but you will build equity faster and pay significantly less in interest.
The Role of Interest Rates
Even a fractional difference in your interest rate can save or cost you thousands of dollars over the life of your mortgage. Your rate is determined by factors including your credit score, down payment size, and current economic conditions. Securing a lower rate reduces the "rent" you pay on the money borrowed, making your monthly payments more affordable.
Why Calculate Before You Buy?
Using a mortgage calculator allows you to reverse-engineer your home buying budget. Instead of looking at home prices first, start with the monthly payment you are comfortable with. By adjusting the home price, down payment, and interest rate in the calculator above, you can determine a realistic price range that fits your financial goals without making you "house poor."