Mortgage Calculator with Taxes, Insurance and PMI

What goes into a mortgage payment

Most monthly house payments have four parts, often called PITI:

• Principal, the part that pays down what you borrowed.
• Interest, what the lender charges. Early in the loan, most of each payment is interest.
• Taxes, your property tax, usually collected monthly by the lender and paid once or twice a year. US property tax averages about 1% of a home's value but ranges from about 0.3% in Hawaii to over 2% in New Jersey and Illinois.
• Insurance, homeowners insurance, which lenders require.

If you put down less than 20% on a conventional loan, lenders also add private mortgage insurance (PMI), typically 0.3% to 1.5% of the loan per year. It can be removed once you owe 80% or less of the home's original value.

The formula

The monthly principal and interest payment is M = P × r / (1 − (1 + r)−n), where P is the loan amount, r is the yearly rate divided by 12, and n is the number of monthly payments. For a $320,000 loan at 6.5% over 30 years, r = 0.005417 and n = 360, so M ≈ $2,022.

15-year vs 30-year mortgage

A 15-year loan has higher monthly payments but usually a lower rate, and you pay far less interest overall. On a $320,000 loan, a 30-year term at 6.5% costs about $408,000 in interest, while a 15-year term at 5.75% costs about $158,000, though the monthly payment rises from about $2,022 to about $2,657.

Frequently asked questions

How much house can I afford?

A common guideline is to keep your total housing payment under 28% of gross monthly income and all debt payments under 36%. On an $8,000 monthly income, that means a housing payment of about $2,240 or less.

When does PMI go away?

On a conventional loan you can ask to cancel PMI when you owe 80% of the home's original value, and it ends automatically at 78%.

Do extra payments really help?

Yes. Extra payments go straight to principal, which cuts the interest charged every month after. Even $100 a month can take years off a 30-year mortgage.