How to use the mortgage calculator
- Enter the home price and your down payment as a percentage.
- Enter the interest rate you have been quoted and choose the loan term.
- Add yearly property tax (as a percentage of the home value), home insurance, PMI and any HOA fees.
- See your total monthly payment, split into its parts, plus the total interest over the life of the loan.
What makes up a mortgage payment (PITI)
| Part | What it is |
|---|---|
| Principal | Repays the amount you borrowed |
| Interest | The lender’s charge for the loan |
| Taxes | Property tax, often collected monthly into an escrow account |
| Insurance | Homeowners insurance, also usually paid via escrow |
| PMI | Private mortgage insurance, typically required on conventional loans with less than 20% down |
| HOA | Homeowners association dues, paid separately |
The mortgage formula
M = P × r × (1 + r)ⁿ ÷ ((1 + r)ⁿ − 1)
where P is the loan amount, r the monthly rate (annual rate ÷ 12 ÷ 100) and n the number of monthly payments. For a $280,000 loan at 6.5% over 30 years, principal and interest come to about $1,770 per month, and total interest over 30 years is about $357,000 — more than the amount borrowed.
How to lower your monthly payment
- Put down 20% or more to avoid PMI on a conventional loan.
- Improve your credit score before applying — it has a big effect on the rate you are offered.
- Compare lenders. A 0.5% lower rate on a $280,000 30-year loan saves roughly $90 a month.
- Consider the term. A 15-year mortgage has higher monthly payments but a lower rate and dramatically less total interest.
- Remove PMI once you reach 20% equity — on conventional loans it is cancelled automatically at 22%.
How much house can I afford?
A common guideline is the 28/36 rule: keep housing costs (the total shown above) under 28% of gross monthly income, and all debt payments under 36%. Use our Salary Calculator to convert your pay to a monthly figure.
This calculator is designed around US-style mortgages. The core payment formula is the same for home loans worldwide; for home loans in Bangladesh, India or elsewhere, set tax, insurance and PMI to zero or use the Loan & EMI Calculator.
Frequently asked questions
What is included in a mortgage payment?
Principal and interest, plus usually property tax and homeowners insurance (PITI). PMI and HOA fees may be added.
When can I drop PMI?
On US conventional loans you can request cancellation at 20% equity, and it ends automatically at 22% equity based on the original schedule.
Is a 15-year or 30-year mortgage better?
A 15-year loan costs much less interest overall but has higher monthly payments. A 30-year loan is more affordable monthly but more expensive in total.
How accurate is this estimate?
The principal and interest are exact for a fixed-rate loan. Taxes, insurance and PMI vary, so use your lender’s quotes for a precise figure.