Mortgage Calculator

How Mortgage Payments Are Calculated

Your monthly mortgage payment has up to four components, often abbreviated PITI: Principal, Interest, Taxes, and Insurance. If your down payment is less than 20%, a fifth component — PMI (Private Mortgage Insurance) — is added until you reach 80% loan-to-value.

Principal & Interest (P&I)

The P&I portion is fixed for the life of a fixed-rate mortgage. It's calculated using the standard amortization formula: your loan amount, interest rate, and term determine a constant monthly payment that pays off the balance to zero by the final month. In early years, most of each payment is interest; in later years, most goes to principal.

Property Taxes

Property taxes vary widely by state and county — from under 0.5% annually in Hawaii to over 2% in New Jersey and Illinois. Most lenders collect taxes monthly in an escrow account and pay your tax bill directly. The calculator uses your inputted annual rate; adjust it to match your county's actual rate.

PMI — Private Mortgage Insurance

PMI is required by most lenders when your down payment is less than 20% of the home's purchase price. It protects the lender if you default. Typical cost: 0.5–1.5% of the loan amount annually. PMI can be removed once your equity reaches 20% — either by paying down the balance or through appreciation. The calculator uses a standard 0.85% rate.

15-Year vs. 30-Year Mortgage

A 15-year mortgage has a higher monthly payment but saves significantly on total interest — often $100,000 or more on a $400,000 loan. The 30-year gives you lower monthly payments and more flexibility. Run both scenarios in the calculator to compare the trade-off for your situation.