How this mortgage calculator works
Enter the home price, your down payment, the interest rate and the loan term. The calculator works out your monthly principal and interest payment, then adds the recurring costs lenders typically escrow: property tax, home insurance, private mortgage insurance (PMI) if your down payment is below 20%, and any HOA dues. The result is your full estimated monthly housing payment, often called PITI (Principal, Interest, Taxes and Insurance).
Understanding your down payment and PMI
Putting down less than 20% of the home's price usually means the lender requires PMI to protect itself against default. PMI is charged as a percentage of the loan amount per year, split into monthly installments. As you pay down the loan and your balance drops to 80% of the home's original value, PMI is generally no longer required — this calculator's yearly breakdown table reflects that cutoff automatically.
Principal and interest vs. the full payment
The core loan formula is the same as any amortizing loan:
M = P × [r(1+r)^n] / [(1+r)^n − 1]
where P is the loan amount (home price minus down payment), r is the monthly interest rate, and n is the number of monthly payments. Property tax, insurance, PMI and HOA are added on top and don't reduce your loan balance — they're separate recurring costs of homeownership.
Tips for a lower monthly payment
- Increase your down payment. A bigger down payment shrinks the loan amount and can eliminate PMI entirely if it reaches 20%.
- Shop your rate. Even a small difference in interest rate has a large effect on the monthly payment and total interest over a 30-year term.
- Compare loan terms. A 15-year loan has a higher monthly payment but far less total interest than a 30-year loan at the same rate.
- Ask about escrow waivers. Some lenders let strong-credit borrowers pay property tax and insurance directly instead of through escrow, which doesn't change the total cost but can affect monthly cash flow.
Frequently asked questions
What's included in the monthly payment shown here?
The total combines principal and interest (P&I) on the loan with an estimated escrow for property tax, home insurance, PMI (if applicable) and HOA dues. Lenders often call this full figure PITI: principal, interest, taxes and insurance.
When does PMI go away?
Private mortgage insurance is typically required when your down payment is below 20% of the home's price. This calculator removes PMI from the schedule once your loan balance falls to 80% of the original home value, matching common lender practice.
How can I lower my estimated monthly payment?
A larger down payment reduces the loan amount and can eliminate PMI. A lower interest rate or longer term also reduces the monthly figure, though a longer term increases total interest paid over the life of the loan.
Does this include closing costs?
No. Closing costs (loan origination fees, title insurance, appraisal, etc.) are typically paid upfront or rolled into the loan and are not part of the recurring monthly payment estimated here.
Why are property tax and insurance estimates instead of exact figures?
Actual property tax and insurance premiums vary by location, home value and provider. Use figures from a recent tax bill or insurance quote for the most accurate estimate, or check with your local assessor's office.
This calculator is for general informational purposes only and does not constitute financial advice. Speak with a licensed lender or financial advisor for guidance specific to your situation.