Mortgage Calculator
A mortgage calculator helps you estimate your monthly mortgage payment when buying a home. Unlike a simple loan calculator, a mortgage payment typically includes four components, often referred to as PITI: Principal, Interest, Taxes, and Insurance. The principal and interest portion is calculated using the standard amortization formula, while property taxes and homeowners insurance are added on top as monthly costs. This calculator takes five inputs: the home price, your down payment, the annual interest rate, the loan term in years, and annual property taxes and insurance combined. It then shows your monthly P&I payment, your monthly tax and insurance cost, and your total monthly payment. Knowing your full monthly payment before buying a home is essential for budgeting and for getting pre-approved by a lender. Most lenders require that your monthly housing payment (PITI) be no more than 28% of your gross monthly income. A larger down payment reduces your loan amount, which reduces your monthly payment and may help you avoid private mortgage insurance (PMI).
Formula
Monthly Payment = P&I + (Taxes + Insurance) / 12 P&I = P x r x (1 + r)^n / ((1 + r)^n - 1) Where: P = Loan amount (home price - down payment) r = Monthly interest rate (annual rate / 12 / 100) n = Total number of months (years x 12) P&I = Principal and Interest payment
Example
Example: Buy a $400,000 home with 20% down ($80,000) at 6.5% for 30 years. Annual taxes + insurance = $6,000. Step 1: Loan amount (P) P = 400,000 - 80,000 = $320,000 Step 2: Monthly rate (r) r = 6.5 / 12 / 100 = 0.00542 Step 3: Total months (n) n = 30 x 12 = 360 Step 4: P&I payment = 320,000 x 0.00542 x (1.00542)^360 / ((1.00542)^360 - 1) = $2,022 (approx) Step 5: Monthly tax + insurance = 6,000 / 12 = $500 Step 6: Total monthly payment = 2,022 + 500 = $2,522 Result: Your monthly mortgage payment is about $2,522 ($2,022 P&I + $500 taxes and insurance).
How to Use
- Enter the total price of the home you want to buy.
- Enter your down payment amount.
- Enter the annual interest rate from your lender.
- Enter the loan term in years (typically 15 or 30).
- Enter your annual property taxes and insurance combined.
- Click Calculate to see your monthly P&I, tax/insurance, and total payment.
Frequently Asked Questions
What is PITI in a mortgage payment?
PITI stands for Principal, Interest, Taxes, and Insurance. Your total monthly mortgage payment includes the principal and interest on the loan, plus a portion of your annual property taxes and homeowners insurance, which lenders typically collect as part of your monthly payment and hold in an escrow account.
How much down payment do I need?
A 20% down payment is traditional because it avoids private mortgage insurance (PMI). However, many loans allow lower down payments: conventional loans may require as little as 3-5%, FHA loans require 3.5%, and VA and USDA loans may require 0%. A lower down payment means a higher monthly payment and PMI costs.
What is private mortgage insurance (PMI)?
PMI is insurance that protects the lender (not you) if you default on the loan. It is typically required when your down payment is less than 20% of the home price. PMI usually costs 0.5% to 1% of the loan amount per year, added to your monthly payment. Once your loan-to-value ratio reaches 80%, you can request to have PMI removed.
What is the 28/36 rule for mortgage affordability?
The 28/36 rule is a guideline used by lenders. Your monthly housing payment (PITI) should not exceed 28% of your gross monthly income, and your total monthly debt payments (including the mortgage, car loans, student loans, and credit cards) should not exceed 36% of your gross monthly income.
Should I choose a 15-year or 30-year mortgage?
A 30-year mortgage has lower monthly payments but you pay much more total interest over the life of the loan. A 15-year mortgage has higher monthly payments but saves tens of thousands in interest and pays off the home in half the time. For example, on a $320,000 loan at 6.5%, a 30-year term costs about $460,000 in interest, while a 15-year term costs about $182,000 in interest.
Does this calculator include PMI, HOA fees, or closing costs?
No. This calculator shows principal, interest, taxes, and insurance (PITI) only. If your down payment is less than 20%, add PMI (about 0.5-1% of the loan per year). If your home is in a community with HOA fees, add those monthly. Closing costs (2-5% of the loan amount) are paid upfront at closing, not monthly.