Mortgage Calculator
Calculate your monthly mortgage payment including principal, interest, property taxes, insurance, and PMI.
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Understanding Your Mortgage
A mortgage is a loan used to purchase real estate, where the property itself serves as collateral. Most homebuyers finance their purchase with a mortgage that is repaid over 15 to 30 years in fixed monthly installments. Each payment is split between reducing the principal balance and paying interest, with early payments going primarily toward interest. Over time, a larger share of each payment goes toward principal in a process called amortization.
Beyond the loan payment itself, homeowners should budget for property taxes and homeowner's insurance, which are often collected monthly by the lender and held in an escrow account. Property tax rates vary significantly by location, typically ranging from 0.3% to 2.5% of the home's assessed value per year. If your down payment is less than 20%, your lender will require Private Mortgage Insurance (PMI), adding 0.3% to 1.5% annually until you build sufficient equity.
When comparing mortgage options, focus on the total cost over the life of the loan rather than just the monthly payment. A lower interest rate or shorter term can save tens or even hundreds of thousands of dollars in interest. Use this calculator to compare different scenarios and find the right balance between affordable monthly payments and long-term savings.
Frequently Asked Questions
What is included in a monthly mortgage payment?
A monthly mortgage payment typically includes four components known as PITI: Principal (the loan balance), Interest (the cost of borrowing), property Taxes, and homeowner's Insurance. If your down payment is less than 20%, Private Mortgage Insurance (PMI) is also included until you reach 20% equity.
What is the difference between a fixed-rate and adjustable-rate mortgage?
A fixed-rate mortgage keeps the same interest rate for the entire loan term, providing predictable monthly payments. An adjustable-rate mortgage (ARM) starts with a lower rate that changes periodically after an initial fixed period. Fixed-rate mortgages offer stability while ARMs may save money initially but carry the risk of higher future payments.
How does the down payment affect my mortgage?
A larger down payment reduces your loan amount, resulting in lower monthly payments and less total interest paid. Putting down at least 20% eliminates the need for Private Mortgage Insurance (PMI), which typically costs 0.3-1.5% of the loan amount annually. A larger down payment may also help you qualify for a better interest rate.
Should I choose a 15-year or 30-year mortgage?
A 15-year mortgage has higher monthly payments but significantly lower total interest — often saving you hundreds of thousands of dollars. A 30-year mortgage offers lower monthly payments and more financial flexibility. For example, a $300,000 loan at 7% costs about $479,000 in interest over 30 years versus $186,000 over 15 years.
What is PMI and how do I avoid it?
Private Mortgage Insurance (PMI) protects the lender if you default on your loan. It is required when your down payment is less than 20% of the home price. You can avoid PMI by making a 20% down payment, or remove it later once you reach 20% equity in your home through payments or appreciation.