What this mortgage calculator includes
Most lender calculators show only principal and interest, which understates what actually leaves your bank account every month. This calculator adds the other three pieces of a typical payment: property tax, homeowners insurance and HOA dues. Together these are often called PITI (principal, interest, taxes, insurance), and they are what a lender uses to decide how much house you can afford.
Property tax and insurance are usually collected by the lender in an escrow account and paid on your behalf once or twice a year, so they show up as a line on your statement even though they aren't part of the loan itself. HOA dues are paid separately to the association but belong in your affordability math.
How the monthly payment is calculated
The principal-and-interest portion uses the standard amortization formula. Your loan amount is the home price minus the down payment. The lender divides the annual rate by 12 to get a monthly rate, then solves for the fixed payment that pays the balance to exactly zero over the term. Early payments are mostly interest; later payments are mostly principal.
Taxes and insurance are simply the yearly amounts divided by 12. If you don't know your local property tax, a quick rule of thumb is 1% to 2% of the home's value per year, but rates vary widely — New Jersey and Illinois run well above 2%, while Hawaii and Alabama are under 0.5%.
Down payment and PMI
If you put down less than 20% on a conventional loan, the lender will generally require private mortgage insurance. PMI typically costs 0.3% to 1.5% of the loan amount per year, added to your monthly payment until you reach 20% equity. The calculator flags when your down payment is under 20% so you can add an estimate.
FHA loans work differently: they carry an upfront premium plus an annual mortgage insurance premium that, for most borrowers, lasts the life of the loan. VA loans have no monthly insurance but charge a one-time funding fee.
15-year vs 30-year: what changes
Try switching the term between 30 and 15 years. On a $320,000 loan at 6.5%, the 30-year payment is about $2,023 and total interest is roughly $408,000. The 15-year payment jumps to about $2,787, but total interest falls to around $182,000. Shorter terms cost more per month and dramatically less overall. Many buyers choose the 30-year for flexibility, then make extra principal payments when they can — see our amortization calculator to model that.
Monthly principal & interest
M = P × [ r(1 + r)ⁿ ] / [ (1 + r)ⁿ − 1 ]
- M = monthly payment
- P = loan amount (price − down payment)
- r = annual rate ÷ 12
- n = number of monthly payments (years × 12)
Frequently asked questions
+How much house can I afford?
A common guideline is that your total housing payment (PITI plus HOA) should stay under 28% of gross monthly income, and all debt payments under 36%. Lenders may approve up to 43%–50% debt-to-income, but those ceilings leave little room for savings or surprises.
+Does the calculator include PMI?
Not automatically, because PMI rates vary by credit score and lender. When your down payment is under 20% the result shows a note with the typical range; you can add your estimate to the HOA field so it appears in the total.
+What interest rate should I use?
Use the rate on a lender's quote or Loan Estimate if you have one. Otherwise use the current national average for your loan type, and run the calculator at a rate half a point higher to see how sensitive your budget is.
+Why is my actual payment higher than the estimate?
Usually because of PMI, a higher property-tax assessment than you entered, or escrow cushion — lenders are allowed to hold up to two months of extra tax and insurance in escrow, which raises the payment slightly.
+Is it better to put more money down or keep cash?
A bigger down payment lowers your payment, may remove PMI, and can earn a slightly better rate. But draining your emergency fund to get there is risky. Many advisers suggest keeping three to six months of expenses in reserve after closing.