What goes into a mortgage payment (PITI)
Lenders and real-estate agents often talk about PITI: principal, interest, taxes and insurance. On top of that, many buyers pay PMI and HOA fees. This calculator adds them all up, so you see the real monthly cost of owning the home, not just the loan payment.
- Principal and interest: the loan payment itself. It stays the same for the whole term on a fixed-rate mortgage.
- Property tax: set by your county or city as a percentage of the assessed value. Effective rates range from about 0.3% a year in Hawaii to over 2% in New Jersey and Illinois. Your lender usually collects it monthly into an escrow account.
- Homeowners insurance: required by the lender. Premiums vary widely by state and have risen sharply in places like Florida, Louisiana and California.
- PMI (private mortgage insurance): required on a conventional loan when you put down less than 20%. It usually costs about 0.3% to 1.5% of the loan amount a year.
- HOA fees: paid to a homeowners or condo association, if there is one.
Mortgage payment formula
- M = monthly principal and interest
- P = loan amount (home price minus down payment)
- r = monthly interest rate = annual rate ÷ 12 ÷ 100
- n = number of payments (30 years = 360)
Worked example
A $400,000 home with 10% down means a $360,000 loan. At 6.5% for 30 years, principal and interest come to about $2,275 a month. Add property tax at 1.1% ($367), insurance of $2,000 a year ($167) and PMI at 0.5% ($150), and the total is about $2,959 a month. Over 30 years you would pay about $459,000 in interest, more than the loan itself.
15-year vs 30-year mortgage
| $360,000 loan | Rate | Monthly P&I | Total interest |
|---|---|---|---|
| 30-year fixed | 6.5% | $2,275 | $459,000 |
| 15-year fixed | 5.75% | $2,989 | $178,000 |
A 15-year loan costs about $700 more a month here, but saves roughly $280,000 in interest, because the balance is paid down twice as fast and 15-year rates are usually lower.
When does PMI go away?
Under the federal Homeowners Protection Act, PMI on a conventional loan ends automatically once your balance is scheduled to reach 78% of the home's original value, and you can ask your lender to cancel it at 80% if your payment history is good. The calculator shows how many months you will pay it. FHA loans work differently: their mortgage insurance premium (MIP) usually stays for 11 years or for the life of the loan, depending on the down payment.
How much house can I afford?
A common guideline is the 28/36 rule: keep your total housing payment below about 28% of your gross monthly income, and all debt payments (including car loans and student loans) below 36%. With a household income of $120,000 a year ($10,000 a month), that means a housing payment of up to about $2,800. Many lenders approve higher ratios, but a lower payment leaves room for savings and repairs.
Ways to lower your monthly payment
- Put down 20% to avoid PMI on a conventional loan.
- Improve your credit score before applying: the best rates usually go to scores above 740.
- Shop several lenders and compare the APR, not just the rate.
- Consider buying points if you plan to keep the loan for many years.
- Pay extra principal when you can. Try the loan calculator with extra payments to see the savings.
Frequently asked questions
How is a mortgage payment calculated?
The principal and interest part uses the formula M = P × r × (1 + r)^n ÷ ((1 + r)^n − 1). Property tax, homeowners insurance, PMI and HOA fees are then added to get the full monthly payment.
What is the monthly payment on a $400,000 house?
With 10% down and a 6.5% 30-year fixed rate, principal and interest are about $2,275 a month. Including typical property tax, insurance and PMI, the total is roughly $2,950 a month.
How much is PMI?
Usually between 0.3% and 1.5% of the loan amount per year, depending on your credit score and down payment. On a $360,000 loan, 0.5% is $150 a month. It ends automatically when the balance reaches 78% of the original home value.
Is property tax included in my mortgage payment?
Usually yes. Most lenders collect property tax and homeowners insurance with your monthly payment and hold them in an escrow account, then pay the bills for you.
Should I choose a 15-year or 30-year mortgage?
A 30-year loan has a lower monthly payment; a 15-year loan has a higher payment but a lower rate and far less total interest. Many buyers take a 30-year loan for flexibility and make extra payments when they can.
This calculator is for information only and is not a loan offer or financial advice. Your lender's figures will depend on your credit, local taxes, insurance quotes and closing costs.