Complete guide
Reviewed July 2026Your monthly mortgage payment is rarely just principal and interest. Lenders bundle four costs into one number — Principal, Interest, Taxes and Insurance, known together as PITI — and if your down payment is under 20%, private mortgage insurance (PMI) is usually added on top. Estimating all of these before you make an offer is the difference between a home you can comfortably afford and one that quietly stretches you thin.
This calculator turns your loan amount, interest rate and term into a precise monthly payment, then layers in property tax, homeowners insurance and PMI so you see the full number a lender will actually quote. It uses the standard amortization formula banks use, so the principal-and-interest figure matches your loan estimate to the dollar.
Below we break down exactly how each part is calculated, walk through a real example, and show the levers — rate, term, down payment and points — that move your payment the most. The goal is simple: no surprises at closing.
How a monthly mortgage payment is calculated
The principal-and-interest portion is fixed for the life of a fixed-rate loan and comes from the amortization formula. It spreads repayment evenly so that every payment is identical, even though the split between interest and principal shifts over time.
The amortization formula
M = P × r × (1 + r)^n ÷ ((1 + r)^n − 1) M = monthly principal + interest P = loan amount (price − down payment) r = monthly interest rate (annual rate ÷ 12) n = number of payments (years × 12)
The full monthly payment then adds the escrow items: PITI = Principal + Interest + (annual property tax ÷ 12) + (annual homeowners insurance ÷ 12) + monthly PMI. Lenders collect taxes and insurance in an escrow account and pay those bills for you.
Worked example
- Home price $400,000, down payment 10% ($40,000), so the loan P = $360,000.
- Rate 6.5% fixed, 30 years: r = 0.065 ÷ 12 = 0.005417, n = 360.
- Principal & interest: 360,000 × 0.005417 × 1.005417^360 ÷ (1.005417^360 − 1) ≈ $2,275/month.
- Property tax 1.1% of value = $4,400/yr ≈ $367/mo; insurance $1,500/yr ≈ $125/mo.
- PMI at ~0.5% of the loan = $1,800/yr ≈ $150/mo (drops off once you reach 20% equity).
- Total PITI + PMI ≈ 2,275 + 367 + 125 + 150 = $2,917/month.
What moves your payment the most
| Change | Effect on P&I | Why |
|---|---|---|
| Rate 6.5% → 5.5% | −$230/mo | Lower rate cuts the interest portion sharply |
| Term 30 → 15 years | +$665/mo, far less total interest | Faster payoff raises payment but slashes lifetime cost |
| Down payment 10% → 20% | −$255/mo and no PMI | Smaller loan + PMI removed |
| Buy 1 point (1% of loan) | −$55/mo for ~$3,600 upfront | Point lowers the rate ~0.25% |
Getting rid of PMI
- Put 20% down at purchase to avoid PMI entirely.
- Request cancellation once your balance reaches 80% of the original value (you must ask).
- PMI auto-terminates by law at 78% of the original value if you are current on payments.
- A rising home value plus principal paydown can let you refinance out of PMI early.
Using this calculator well
- Enter the home price and your planned down payment — the loan amount updates automatically.
- Use a realistic rate from a recent quote, not an advertised teaser rate.
- Add your local property-tax rate (they vary widely by county) and a homeowners-insurance estimate.
- Include PMI if your down payment is below 20%; remove it once you cross that threshold.
- Compare 30-year vs 15-year side by side to see the payment-versus-interest trade-off.
Frequently asked questions
Glossary
- Principal
- The amount you borrow and still owe; each payment reduces it.
- Amortization
- The schedule that spreads equal payments across the loan, shifting from mostly interest to mostly principal over time.
- PITI
- Principal, Interest, Taxes and Insurance — the components of a full monthly payment.
- PMI
- Private mortgage insurance, charged when the down payment is below 20%, protecting the lender if you default.
- Escrow
- A lender-managed account that collects and pays your property taxes and insurance.
- Discount point
- Prepaid interest equal to 1% of the loan that buys down your rate, usually by about 0.25%.
- LTV
- Loan-to-value ratio — the loan divided by the home value; PMI typically ends at 80% LTV.
Key takeaways
A full mortgage payment is PITI — principal, interest, taxes and insurance — plus PMI when you put down less than 20%.
Principal and interest come from the fixed amortization formula; escrow items are added monthly and can drift as tax and insurance change.
The biggest levers are rate, term and down payment: 20% down removes PMI, and a 15-year term slashes lifetime interest.
Enter your price, down payment and rate above to see your full monthly payment, then compare 15- vs 30-year terms to find your sweet spot.