Mortgage Payment Calculator

Your monthly mortgage payment is more than just paying back the loan. Lenders and servicers typically bundle four components into a single payment, known as PITI: Principal, Interest, Taxes, and Insurance. Understanding each piece helps you budget accurately and avoid surprises.

Principal & Interest

The principal is the portion of each payment that reduces your loan balance. Interest is what the lender charges for borrowing the money. Early in a 30-year mortgage, roughly 70-80% of each payment goes to interest. By the final years, that ratio flips almost entirely to principal. A 15-year mortgage builds equity much faster because the shorter term means less total interest.

Property Taxes

Property tax rates vary widely by location — from under 0.3% in Hawaii to over 2.0% in New Jersey and Illinois. Your lender typically collects 1/12 of your annual property tax bill each month and holds it in escrow. On a $400,000 home at a 1.2% tax rate, that adds $400/month to your payment.

Homeowners Insurance

Lenders require homeowners insurance to protect the property (their collateral). Average annual premiums range from $1,200 to $3,000+ depending on location, coverage amount, and risk factors like flood zones. Like taxes, this is usually escrowed — collected monthly and paid annually by your servicer.

Private Mortgage Insurance (PMI)

If your down payment is less than 20%, most conventional lenders require PMI, which protects the lender (not you) against default. PMI typically costs 0.3% to 1.5% of the original loan amount per year. The good news: once your loan-to-value ratio reaches 80% (either through payments or appreciation), you can request PMI removal. At 78% LTV, it must be automatically canceled.

How Interest Rates Affect Your Payment

On a $320,000 loan (80% of $400,000), the difference between 6.0% and 7.0% is about $213/month — or $76,680 over 30 years. Even a 0.25% rate difference adds up to roughly $18,000 in total interest. Shopping multiple lenders and improving your credit score before applying can save tens of thousands.

Frequently Asked Questions

What's not included in PITI? HOA dues, maintenance costs, and utilities are not part of your mortgage payment. Budget an additional 1-2% of the home value per year for maintenance.

Should I choose 15 or 30 years?A 15-year mortgage has higher monthly payments but saves dramatically on total interest — often 50-60% less. Choose 30 years if you need the cash flow flexibility, but consider making extra principal payments when possible.

When does PMI go away? For conventional loans, you can request PMI removal at 80% LTV and it automatically drops at 78% LTV. FHA loans with less than 10% down require mortgage insurance for the life of the loan.