What is a mortgage payment made of?
A mortgage payment is the money a lender collects every month, and it usually covers more than the loan. The core is principal and interest: principal repays what you borrowed, interest is the price of borrowing it. On top of that, most lenders collect one twelfth of the annual property tax and one twelfth of the homeowner insurance premium, hold them in an escrow account, and pay those bills for you when they come due.
If your down payment was under 20% of the price, a fourth part appears: private mortgage insurance, or PMI. It protects the lender, not you, and it is charged as a percentage of the loan until the balance falls below 80% of the home price. Condo and HOA owners pay dues as well, usually directly rather than through escrow.
The shorthand for the whole package is PITI: principal, interest, taxes, insurance. The calculator above shows each part on its own card, because the parts behave differently. Principal and interest are fixed for the life of a fixed-rate loan, taxes and insurance rise over the years, and PMI is the one part that goes away.
Knowing the split matters more than it first appears. Two homes with the same price can carry very different monthly costs if the property tax rate, the insurance premium or the HOA dues differ, and a buyer who compares only the quoted P&I will feel the difference every month for years.
The monthly mortgage payment formula
The principal and interest payment comes from the standard amortization formula: M = P × r ÷ (1 − (1 + r)^−n), where P is the loan amount, r is the monthly interest rate (the annual rate divided by 12), and n is the number of monthly payments (the years times 12).
Each piece moves the answer. A bigger P scales the payment almost exactly in proportion, which is why the payment is the first thing buyers trim when they cut the price. The rate works through the formula nonlinearly: going from 6% to 7% on a 30-year loan raises the payment by about 11%, not 17%, because most of the increase compounds. The term works in the opposite direction it first suggests: a longer term lowers the monthly payment but multiplies the number of payments, which is how a 30-year loan ends up charging far more total interest than a 15-year one.
The formula answers only principal and interest. The full payment this page computes is that figure plus the monthly shares of tax and insurance, plus HOA dues, plus PMI while PMI applies. Lenders quote the P&I number when they say "principal and interest" and the larger number when they say "total monthly payment," and reading one where you expected the other is the classic surprise at the closing table.
For anyone who wants the arithmetic in one line: a $340,000 loan at 6.5% for 30 years is P = 340000, r = 0.065 ÷ 12, n = 360, which gives $2,149.03 a month. That is the example the calculator opens on.
Worked example: a $400,000 home with 15% down
Put $60,000 down on a $400,000 home and you borrow $340,000. At a 6.5% fixed rate over 30 years, the amortization formula gives a principal and interest payment of $2,149.03. That is the loan-only number.
The carrying costs ride on top. Annual property tax of $4,800 adds $400.00 a month; homeowner insurance of $1,500 adds $125.00; and because 15% down leaves the loan at 85% of the price, PMI of 0.5% of the loan per year adds $141.67 a month in the early years. The total payment is $2,815.70.
The lifetime figures are where mortgages earn their reputation. On the standard schedule, with no extra payment, this loan charges $433,651 of interest over the full 30 years, more than the $340,000 originally borrowed, and adding the down payment puts the total cost of the home at $833,651, over twice the price on the sticker. The sheet above opens with $100 a month of extra principal already applied, so its own Total Interest card reads $371,319 and its Payoff Date card reads Mar 2053 rather than Oct 2056.
Two escape hatches are built into the calculator. Dropping PMI, which happens once the balance reaches $320,000 or 80% of the price, trims the payment to $2,674.03. And every extra dollar paid each month goes straight to the balance, which the next section prices out.
What PMI is and when it goes away
Private mortgage insurance is a premium the borrower pays to protect the lender against default. It applies to conventional loans when the down payment is under 20% of the purchase price, and it is priced as an annual percentage of the original loan, commonly 0.3% to 1.5% depending on credit and loan size.
PMI does not last the whole loan, and federal law under the Homeowners Protection Act sets two separate dates. You can ask the servicer in writing to cancel PMI once the balance reaches 80% of the original price and your payments are current, and extra principal pulls that date forward because the balance gets there sooner. If you never ask, the lender must terminate PMI at the month the original schedule is projected to reach 78% of the original value, and extra payments cannot move that date, because it is written from the schedule you started with. The 80% request always comes first, so this calculator works off that line and shows the month you would qualify to ask.
On the worked example, the 0.5% PMI on a $340,000 loan costs $141.67 a month. The balance reaches $320,000, which is 80% of the price, with the June 2031 payment, so July 2031 is the first PMI-free payment on the standard schedule: 56 payments, about $7,933 of PMI in total. Pay an extra $100 a month and the same milestone arrives a year sooner, with July 2030 the first PMI-free payment.
Two practical notes. First, PMI is not forever, but FHA loans charge a mortgage insurance premium with different, sometimes harsher rules, so compare the all-in payment rather than the rate alone. Second, PMI is not the same as the mortgage interest deduction question and it is not refundable: it is simply a monthly cost that rewards equity.
What an extra $100 a month actually does
Because interest each month is charged on the remaining balance, any dollar paid above the required amount removes balance that would otherwise sit accruing interest for decades. The effect compounds: the extra payment shrinks the balance, the smaller balance charges less interest next month, and more of the same required payment retires principal.
On the worked example, $100 a month of extra principal saves $62,332 in interest and pays the loan off 43 months early, in March 2053 instead of October 2056. The payment never rises; the loan simply ends sooner and cheaper.
The earlier the extras start, the more they are worth, because early payments are the most interest-heavy years of the whole schedule. In the first twelve months of this loan, only about $3,800 of the $25,788 of principal and interest paid goes to principal on the standard schedule; by year 25, principal carries about 70% of every payment. Extra dollars spent in year one remove more future interest than the same dollars in year 20.
Before setting up extras, check the loan for a prepayment penalty (rare on conventional loans now, real on some others) and tell the servicer the extra is to be applied to principal, not held as an early payment for next month. The calculator prices any monthly amount, so the trade-off against investing the difference can be compared directly.
15-year vs 30-year mortgage
On the standard schedule, with no extra payment, the same $340,000 loan at 6.5% over 15 years instead of 30 raises the principal and interest payment from $2,149.03 to $2,961.77, an extra $812.74 a month, and cuts total interest from $433,651 to $193,118, a saving of about $240,500. That is why the 15-year term is the strongest interest lever on the whole page.
What the shorter term buys is not just less interest but a different risk shape: equity builds far faster, because principal is being retired at double speed. After five years, the 15-year schedule has repaid about 23% of the loan; the 30-year schedule about 6%.
The right answer is personal, and it is mostly about cash flow. The 15-year payment must be made every month regardless of job changes, vacancies or repairs, so investors and buyers with variable income often take the 30-year term for its lower required payment and simply pay extra when they can, which recovers most of the interest saving without the obligation.
The calculator prices this directly: the term comparison table above runs your rate, price and extra payment at 15, 20 and 30 years side by side, and the extra-payment field reproduces the 30-year loan with voluntary payments. Compare the two paths on your own numbers rather than on a rule of thumb.
How much house can I afford?
The common lending guideline is the 28/36 rule: housing costs, meaning the full PITI payment, should stay under 28% of gross monthly income, and all monthly debt combined under 36%. On a $100,000 salary that is about $2,333 of monthly payment, which at 6.5% over 30 years, with this page’s example taxes, insurance and PMI, supports roughly a $315,000 home with 15% down.
Lenders may approve more than that. Automated underwriting often stretches to 40% or 45% of income for the total debt load, and the approval letter will say so. The guideline exists because the approved maximum and the comfortable maximum are different numbers, and the gap is what gets people house-poor.
Work backwards from the payment, not forwards from the price. Decide the highest monthly payment your budget tolerates, subtract the local tax and insurance shares and any HOA dues, and what remains is the P&I you can carry, which the calculator converts into a loan amount through the rate and term you expect to get.
The same discipline applies to investment purchases, with a stricter test: if you are buying a rental rather than a home, the property should pay its own way, and the rental cash flow calculator projects exactly that, mortgage payment included, for every year of the hold.
Taxes, insurance and escrow
Escrow is a holding account the lender manages. Each monthly payment includes one twelfth of the expected annual property tax and one twelfth of the insurance premium; the lender accumulates those amounts and pays the bills on their due dates. The buyer never writes the tax bill payment directly, and the lender is protected from a tax lien or an uninsured loss.
The escrow amounts are estimates, and they change. Tax assessments, millage rates and insurance premiums move every year, so lenders run an escrow analysis annually and adjust the payment. A payment quoted in year one will usually be different by year five even on a fixed-rate loan, and the fixed part is only the principal and interest.
Some lenders waive escrow for well-qualified borrowers with large down payments, in which case the borrower pays the tax and insurance bills directly. The monthly payment looks smaller, but nothing is actually saved: the same bills arrive, just addressed to you.
When comparing loan offers, compare the P&I and the rate, then price taxes and insurance separately, because those depend on the property and the carrier rather than the lender. The calculator keeps them as their own fields for exactly that reason.
How these numbers are calculated
Principal and interest come from the standard amortization formula, M = P × r ÷ (1 − (1 + r)^−n), computed on the loan amount (price minus down payment) at the monthly rate over the term in months. The engine then runs the full schedule month by month: interest is the balance times the monthly rate, principal is the payment minus that interest, and the balance rolls forward until it reaches zero.
PMI is charged monthly while the balance sits above 80% of the home price, and it stops the month the payment takes the balance to that line, which is the point at which a borrower can ask for cancellation. The lender’s automatic termination at 78% runs off the original schedule and always falls later, so the 80% line is the one that decides the answer here. Extra principal is applied every month on top of the required payment, and the loan is solved twice, once with extras and once without, so the interest-saved card compares the same loan against itself rather than against an example.
The payoff date reads off the schedule from the first payment month you set, and the year-by-year table aggregates the same schedule into calendar years, so early partial years and the final year show as the partial amounts they really are. Everything runs in your browser: no input is sent anywhere, and saved comparisons live in local storage on your own device.
Which calculator to use next
The mortgage answers the cost of buying. If the question is what a property earns as a rental, the rental cash flow calculator carries this same payment into a full annual projection, with rent, expenses, vacancy and the eventual sale in one pass.
If the question is whether the price makes sense before any loan, the cap rate calculator measures what the building earns per dollar of price, and the 1% rule calculator is the one-line screen for the same idea. Both are the no-mortgage counterparts of this page.
And if the loan is the point, the DSCR calculator runs the coverage test lenders apply to investment mortgages: rent divided by the payment this page computes. For the tenant side of the same monthly number, the prorated rent calculator splits one month of rent at a move-in or move-out date.
Frequently asked questions
20 answers, no funnel.
How do I calculate my monthly mortgage payment?
Take the loan amount (price minus down payment), apply the amortization formula with the monthly rate and term, then add one twelfth of annual property tax and insurance, HOA dues, and PMI if your down payment was under 20%. Enter the numbers above and the Monthly Payment card shows the full figure.
What is the formula for a mortgage payment?
M = P × r ÷ (1 − (1 + r)^−n), where P is the loan amount, r is the annual rate divided by 12, and n is the number of monthly payments. It gives the principal and interest only; taxes, insurance and PMI are added on top.
How much is the mortgage payment on a $400,000 house?
With 15% down ($60,000) at 6.5% over 30 years, principal and interest are $2,149.03. Add typical taxes and insurance and the all-in payment is near $2,800. Change the inputs above to match your rate, taxes and down payment.
What does PITI mean?
Principal, interest, taxes and insurance: the four parts of a typical mortgage payment. Principal repays the loan, interest is the cost of borrowing, taxes and insurance are collected monthly and paid from escrow on your behalf.
Is PMI required with less than 20% down?
On conventional loans, yes: private mortgage insurance applies until the balance reaches 80% of the home price. Ask for cancellation at 80%, and if you never ask, the lender must end it automatically at 78% of the original value on the original schedule.
How do I get rid of PMI?
Pay the balance down to 80% of the home price, then ask the servicer in writing to cancel it while your payments are current. Extra principal gets you there sooner, and on some loans a higher appraised value counts too. Without a request the lender terminates PMI at 78% of the original value on the original schedule. The calculator shows the month your PMI ends.
Is it worth paying an extra $100 a month on my mortgage?
On a $340,000 loan at 6.5% over 30 years, an extra $100 a month saves about $62,000 in interest and pays the loan off roughly 3 years and 7 months early. The earlier you start, the more it saves.
Why is the interest so much more than the loan amount?
Because interest is charged on the balance every month for decades. On the standard 30-year schedule at 6.5% it reaches about 128% of the amount borrowed; the Total Interest card on this page reads 109% only because it already includes the default extra payment. Shorter terms and extra payments are the two levers that change it.
What is the difference between 15-year and 30-year mortgages?
A 15-year loan has a higher monthly payment but charges far less total interest. On the standard schedule, without extra payments, the same $340,000 loan at 6.5% costs $2,961.77 a month with $193,118 of interest over 15 years, against $2,149.03 a month and $433,651 over 30 years.
Are property taxes included in a mortgage payment?
Usually yes, through escrow: the lender collects one twelfth of the annual tax with each payment and pays the bill for you. Some borrowers with large down payments waive escrow and pay taxes directly, but the cost is the same.
What is escrow on a mortgage?
A holding account the lender manages for your property tax and insurance bills. You pay a twelfth of each annually with every monthly payment, the lender accumulates it and pays the bills when due, and the amounts adjust each year as the bills change.
How much house can I afford on my salary?
A common ceiling is 28% of gross monthly income going to the full payment, with total debt under 36%. On $100,000 a year that is about $2,333 a month. Approval letters often allow more; the guideline marks the comfortable line rather than the maximum.
How much mortgage can I qualify for?
That is the lender’s number rather than yours: underwriting weighs debt-to-income, credit, down payment and reserves, and automated approval often stretches total debt to 40% or 45% of income. It is a ceiling, not a target, so compare it with the 28% comfort line above and back into the loan that supports the payment you actually want.
How much down payment do I need?
Conventional loans start at 3% to 5% down, 20% avoids PMI, and 15% is a common middle ground. The down payment changes the loan amount, the payment, and whether PMI applies, which the calculator shows live as you move it.
How is each payment split between principal and interest?
Interest is the balance times the monthly rate; the rest of the payment retires principal. Early in the loan most of the payment is interest, and the split shifts toward principal every month as the balance falls, which the year-by-year table above shows.
What is amortization?
The schedule that retires a loan in equal payments: each month the same payment is charged, interest takes the share the balance demands, and principal takes the rest, so the balance falls slowly at first and rapidly at the end.
Does making extra payments shorten the loan?
Yes. Extra dollars go straight to the balance, which reduces the interest charged every month afterward and ends the loan early. This calculator prices any monthly amount and shows the new payoff date and interest saved against the standard schedule.
How long does it take to pay off a mortgage?
A 30-year loan is 360 monthly payments and a 15-year loan is 180, counted from the first payment month you enter. Extra principal shortens it: the example loan on this page loses 43 months to a $100 monthly extra. The Payoff Date card gives your answer as soon as the fields are filled in.
What happens to my payment when PMI ends?
It drops by the PMI amount, nothing else changes. On a 0.5% PMI rate over a $340,000 loan, that is $141.67 a month back. The calculator shows both the payment with PMI and the lower payment after it ends.
Is this mortgage calculator free?
Yes, completely, with no account and no limits. Every calculation runs in your browser, nothing you enter is sent anywhere, and the permalink button copies a link with your numbers already filled in.