';
}
function getPayoffDate(years) {
var d = new Date();
d.setFullYear(d.getFullYear() + parseInt(years));
var options = { month: 'long', year: 'numeric' };
return d.toLocaleDateString("en-US", options);
}
How to Calculate Your Mortgage Payments
Buying a home is one of the most significant financial decisions you will make. Understanding how your monthly mortgage payment is calculated is crucial for budgeting and financial planning. This calculator helps you break down the specific costs associated with your loan, including principal, interest, taxes, and insurance (often referred to as PITI).
The 4 Pillars of a Mortgage Payment (PITI)
Most monthly mortgage payments consist of four main components:
Principal: This is the portion of your payment that goes directly toward paying down the loan balance (the amount you borrowed). In the early years of a mortgage, this amount is small, but it grows over time.
Interest: This is the fee the lender charges you for borrowing the money. It is calculated as a percentage of your remaining principal balance.
Taxes: Property taxes are assessed by your local government. Lenders often collect this monthly and hold it in an escrow account to pay the tax bill when it is due.
Insurance: Homeowners insurance protects your property against damage. Like taxes, this is often collected monthly and paid by the lender on your behalf.
How Interest Rates Affect Your Buying Power
Your interest rate significantly impacts your monthly payment and the total cost of your home. Even a small difference, such as 0.5%, can change your monthly payment by hundreds of dollars and your total interest paid over 30 years by tens of thousands. Use the calculator above to compare different interest rate scenarios to see how affordable a home truly is at current market rates.
Example Calculation
Let's say you purchase a home for $350,000 with a 20% down payment ($70,000). Your loan amount is $280,000.
At a 4% interest rate on a 30-year fixed loan, your Principal & Interest payment is roughly $1,337.
At a 7% interest rate, that same loan costs roughly $1,863 per month.
This difference of over $500 per month demonstrates why shopping for the best rate is essential.
Frequently Asked Questions
What is Private Mortgage Insurance (PMI)?
If you put down less than 20% of the home's value, lenders often require Private Mortgage Insurance. This protects the lender if you default. This calculator focuses on PITI, so if you are putting down less than 20%, remember to budget an extra 0.5% to 1% of the loan amount annually for PMI.
Should I choose a 15-year or 30-year term?
A 15-year mortgage typically comes with a lower interest rate and you will pay significantly less interest over the life of the loan. However, the monthly payments are higher because you are paying off the principal much faster. A 30-year term offers lower monthly payments, giving you more flexibility in your monthly budget.
Does this calculator include HOA fees?
This calculator includes provisions for Property Tax and Home Insurance. If you are buying a condo or a home in a managed community, you should add your Homeowners Association (HOA) fees on top of the estimated total provided above to get your full housing cost.