How this mortgage calculator works
Your monthly mortgage payment is more than the loan itself. Lenders usually collect four things, known as PITI: principal, interest, taxes and insurance. If you put down less than 20%, most conventional loans add private mortgage insurance (PMI), and some neighborhoods charge HOA dues. This calculator adds all of them so the number you see is close to what actually leaves your bank account.
The principal and interest formula
Here P is the loan amount, r is the annual rate divided by 12, and n is the number of monthly payments. On a 30-year loan, n is 360.
How to lower your monthly payment
- Put down 20% or more to avoid PMI on a conventional loan.
- Improve your credit score. Even a 0.25% lower rate saves thousands over 30 years.
- Shop several lenders. Rate quotes on the same day can vary a lot.
- Consider points. Paying points upfront lowers the rate, which pays off if you keep the loan long enough.
- Appeal your property tax assessment if it is higher than comparable homes nearby.
Why extra payments matter
Every extra dollar you pay goes straight to principal, so it stops generating interest for the rest of the loan. Enter an amount in Extra principal to see how many years you can cut and how much interest you avoid. Check that your lender applies extra payments to principal and does not charge prepayment penalties.
15-year vs 30-year mortgage
A 15-year loan has a higher monthly payment but usually a lower rate and far less total interest. A 30-year loan gives you a lower payment and more flexibility. Switch the term above to compare both on your own numbers.
Frequently asked questions
What is included in a mortgage payment?
Most payments include principal, interest, property taxes and homeowners insurance (PITI). Loans with less than 20% down usually add PMI, and some properties add HOA dues.
How much house can I afford?
A common guideline is to keep housing costs below 28% of gross monthly income and total debt payments below 36% to 43%. Use a home affordability calculator to estimate your maximum price.
When does PMI go away?
On conventional loans you can usually ask to cancel PMI once your balance reaches 80% of the original home value, and it ends automatically at 78%.
Is it better to pay extra on my mortgage or invest?
Paying extra gives a guaranteed return equal to your mortgage rate. Investing may earn more over time but carries risk. Many people do both after building an emergency fund.
Results are estimates for educational purposes. Actual rates, taxes, insurance and PMI depend on your lender, location and credit profile.