~28%
Max housing expense ratio lenders target
6.93%
Average 30-yr fixed rate (2025)
0.5–1.5%
Typical annual PMI range
360
Payments on a 30-year loan
How the monthly payment is calculated
The core of every fixed-rate mortgage payment is the amortizing-loan formula. Your lender takes the loan amount (purchase price minus down payment), the monthly interest rate (annual rate ÷ 12), and the total number of payments, then solves for the fixed monthly amount that pays off both interest and principal over the loan term. Early payments are mostly interest; later payments are mostly principal. That shift is called amortization.
On top of principal and interest, lenders typically escrow property taxes and homeowner's insurance, collecting one-twelfth of each annual bill every month. If your down payment is less than 20%, private mortgage insurance (PMI) is added too. The calculator adds all four to give you your true monthly cost.
What PITI stands for
- Principal — the portion that reduces your loan balance each month
- Interest — the lender's fee for lending you money, front-loaded in early payments
- Taxes — property tax collected monthly and paid annually by your servicer
- Insurance — homeowner's insurance premium, also escrowed monthly
How to use the mortgage calculator
- Enter the home price and your planned down payment amount
- Set the interest rate — use a current lender quote or today's average for estimates
- Choose your loan term: 30-year fixed gives lower payments; 15-year saves significantly on interest
- Select your state so the calculator can apply the correct average property tax rate
- Add your monthly HOA fee and insurance estimate if known
- Review the PITI breakdown and amortization schedule to see how equity builds over time
Key factors that affect your payment
- Loan-to-value (LTV) ratio — higher LTV means PMI until you reach 80% LTV
- Credit score — even a 0.5% rate difference on a $400k loan costs ~$40,000 over 30 years
- Loan type — FHA loans have lower qualifying bars but mandatory mortgage insurance premiums
- Property location — state and county property tax rates vary from 0.3% to over 2% annually
- ARM vs. fixed — adjustable-rate mortgages start lower but introduce rate risk after the fixed period
💡 Pro tip
Run the calculator twice — once for a 30-year loan and once for a 15-year loan at the same purchase price. The 15-year payment is higher, but you'll often pay less than half the total interest and build equity twice as fast.
Common mistakes to avoid
- Forgetting property taxes and insurance — your real payment is 20–35% higher than principal + interest alone
- Using the teaser rate on an ARM without modelling the adjustment cap
- Ignoring PMI when putting less than 20% down — it can add $150–$400/month on a mid-sized loan
- Not accounting for HOA fees, which can rival a second mortgage in some communities
- Shopping only one lender — multiple quotes typically save buyers $1,500+ in the first year
Related calculators
Before making an offer, check your Home Affordability Calculator to confirm the price fits your income and debt load. Use the Debt-to-Income Ratio Calculator to see whether you meet lender guidelines. And if you're still renting, the Rent vs. Buy Calculator shows the true 30-year cost comparison for your specific situation.