Mortgage Calculator
Calculate your monthly mortgage payment with taxes, insurance, and PMI. See the full amortization schedule and total interest paid over the life of the loan.
| Monthly Principal & Interest | $1,564.62 |
| Monthly Property Tax | $300.00 |
| Monthly Home Insurance | $100.00 |
| Total Monthly Payment | $1,964.62 |
| Total Interest Paid | $323,263.36 |
| Total Cost of Loan (P+I only) | $563,263.36 |
P&I Calculation Steps:
Loan Amount = $240,000.00 Monthly Rate (r) = 6.8% / 12 = 0.5667% Number of Payments (n) = 30 × 12 = 360 M = P × [r(1+r)^n] / [(1+r)^n - 1] M = 240,000 × [0.005667 × (1.005667)^360] / [(1.005667)^360 - 1] M = 240,000 × [0.005667 × 7.6465] / [7.6465 - 1] M = $1,564.62
Amortization Schedule Summary
| Year | Annual Payment | Principal | Interest | Remaining Balance |
|---|---|---|---|---|
| 1 | $18,775.45 | $2,533.44 | $16,242.01 | $237,466.56 |
| 5 | $18,775.45 | $3,322.81 | $15,452.64 | $225,426.21 |
| 10 | $18,775.45 | $4,663.89 | $14,111.56 | $204,970.45 |
| 15 | $18,775.45 | $6,546.23 | $12,229.21 | $176,258.74 |
| 20 | $18,775.45 | $9,188.29 | $9,587.15 | $135,958.98 |
| 25 | $18,775.45 | $12,896.69 | $5,878.76 | $79,394.25 |
| 30 | $18,775.45 | $18,101.79 | $673.66 | $0.00 |
Remaining Balance Over Time
How to Calculate Your Monthly Mortgage Payment
The monthly principal and interest (P&I) portion of a mortgage payment is calculated using the standard loan amortization formula:
M = P × [r(1+r)^n] / [(1+r)^n − 1]
Where:
- M = monthly payment
- P = principal loan amount (home price minus down payment)
- r = monthly interest rate = annual rate ÷ 12
- n = total number of payments = loan term in years × 12
Worked Example
Suppose you buy a $300,000 home with a 20% down payment ($60,000), a 6.8% annual interest rate, and a 30-year term.
Loan Amount (P) = $300,000 - $60,000 = $240,000 Annual Rate = 6.8% Monthly Rate (r) = 6.8% / 12 = 0.5667% = 0.005667 Number of Payments (n) = 30 × 12 = 360 M = 240,000 × [0.005667 × (1.005667)^360] / [(1.005667)^360 - 1] = 240,000 × [0.005667 × 7.6889] / [7.6889 - 1] = 240,000 × 0.043565 / 6.6889 = 240,000 × 0.006512 = $1,562.89 per month (P&I only)
Adding monthly property tax ($3,600 ÷ 12 = $300) and home insurance ($1,200 ÷ 12 = $100) brings the total to approximately $1,962.89/month. With 20% down, no PMI applies.
Over 30 years you will make 360 payments of $1,562.89, totaling $562,640 — meaning $322,640 in interest on top of the $240,000 principal. This is why extra payments and shorter loan terms save so much money.
Understanding Your Mortgage Payment (PITI)
Lenders and real estate professionals refer to the four components of a mortgage payment as PITI:
- Principal — The portion of each payment that reduces your outstanding loan balance. In the first months of a 30-year mortgage, only a small fraction of each payment goes to principal. This gradually increases over the life of the loan — a process called amortization.
- Interest — The lender's fee for lending the money. Calculated each month on the remaining balance, so it decreases as you pay down the loan. For a $240,000 loan at 6.8%, the first month's interest alone is $240,000 × 0.5667% = $1,360.
- Taxes — Property taxes are typically collected monthly and held in an escrow account by the lender. The annual tax bill is divided by 12 and included in each payment. Property tax rates vary widely — from under 0.3% of home value in Hawaii to over 2% in New Jersey.
- Insurance — Homeowners insurance protects the property against fire, theft, and other hazards. Like taxes, it is typically escrowed monthly. Average annual premiums in the US run $1,000–$2,000 depending on location, home value, and coverage.
Private Mortgage Insurance (PMI)
PMI is required when the down payment is less than 20% of the purchase price. It protects the lender (not you) against default. Typical PMI rates are 0.3% to 1.5% of the loan amount per year, added monthly. On a $240,000 loan at 0.5% PMI, that is $100/month.
PMI is not permanent. Under the Homeowners Protection Act of 1998, lenders must automatically cancel PMI when your loan balance reaches 78% of the original purchase price. You can request early cancellation at 80% LTV. With a $300,000 home, that means PMI drops off once your balance falls to $240,000 (80%) or $234,000 (78%). At 20% down you never pay PMI at all — one of the strongest arguments for saving a larger down payment.
30-Year vs. 15-Year Mortgage
The term you choose has a massive impact on monthly payment, interest rate, and total interest paid. Here is a direct comparison using a $240,000 loan at typical rates:
| Feature | 30-Year Fixed | 15-Year Fixed |
|---|---|---|
| Typical interest rate | 6.8% | 6.1% (usually 0.5–0.75% lower) |
| Monthly P&I payment | $1,563 | $2,042 |
| Total interest paid | $322,600 | $127,600 |
| Interest savings vs. 30yr | — | ~$195,000 |
| Monthly payment difference | — | +$479/month |
| Equity build-up speed | Slower | 2× faster |
| Cash flow flexibility | Higher (lower payment) | Lower (higher payment) |
The 15-year mortgage saves roughly $195,000 in interest in this example, but requires $479 more per month. Whether that trade-off is worthwhile depends on your income stability, other financial goals, and investment alternatives. If you can earn more than 6.1% investing the $479 difference, a 30-year mortgage and investing the savings could come out ahead — a calculation worth doing carefully.
A common middle ground: take a 30-year mortgage for its lower required payment, but make extra principal payments when possible. This lets you pay down the loan faster when finances allow, while keeping lower required payments as a safety net.
How Interest Rate Affects Your Payment
A seemingly small rate change produces a large payment difference on a $240,000 loan over 30 years:
| Interest Rate | Monthly P&I | Total Interest Paid |
|---|---|---|
| 5.0% | $1,288 | $223,700 |
| 5.5% | $1,363 | $250,600 |
| 6.0% | $1,439 | $278,000 |
| 6.5% | $1,517 | $306,200 |
| 6.8% | $1,563 | $322,600 |
| 7.0% | $1,597 | $334,800 |
| 7.5% | $1,678 | $364,100 |
| 8.0% | $1,761 | $393,900 |
A 1% rate increase on a $240,000 loan adds roughly $140/month and $60,000–$70,000 in total interest over 30 years. This is why improving your credit score before applying — even by 20–30 points — and shopping multiple lenders can make a meaningful long-term difference.
Frequently Asked Questions
What is included in a monthly mortgage payment?
A full mortgage payment is often called PITI: Principal (the amount repaying your loan), Interest (the lender's fee for the loan), property Taxes (usually escrowed monthly), and homeowners Insurance. If your down payment was less than 20%, Private Mortgage Insurance (PMI) is also added until you reach 20% equity.
How is the monthly principal and interest calculated?
The standard amortization formula is M = P × [r(1+r)^n] / [(1+r)^n − 1], where P is the loan amount, r is the monthly interest rate (annual rate ÷ 12), and n is the total number of monthly payments (years × 12). Early payments are mostly interest; later payments are mostly principal.
When does PMI go away?
By federal law (Homeowners Protection Act), your lender must automatically cancel PMI when your loan balance reaches 78% of the original purchase price, assuming you are current on payments. You can also request cancellation once you reach 80% LTV (loan-to-value ratio) through payments or appreciation — though appreciation typically requires a new appraisal.
Is a 15-year or 30-year mortgage better?
A 15-year mortgage has a higher monthly payment but a lower interest rate and far less total interest paid — often saving $100,000 or more on a $300,000 loan. A 30-year mortgage has a lower monthly payment, which gives more cash-flow flexibility, but you pay interest for twice as long. The right choice depends on your budget, how long you plan to stay in the home, and whether you'd invest the payment difference.
What credit score do I need for a mortgage?
Conventional loans typically require a minimum 620 credit score. FHA loans allow scores as low as 580 (with 3.5% down) or even 500 (with 10% down). VA and USDA loans have no official minimum but lenders usually require 620+. Higher credit scores qualify for lower interest rates, which can save tens of thousands of dollars over the life of the loan.
How much down payment do I need?
Conventional loans allow as little as 3% down (though PMI applies below 20%). FHA loans require 3.5% down. VA loans (for eligible veterans) and USDA loans (for rural properties) offer 0% down options. A 20% down payment eliminates PMI and typically gets you a better interest rate, but it is not a requirement.
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