Calculate your true monthly payment with principal, interest, taxes, insurance, PMI and HOA. Model extra payments, compare a 15-year vs 30-year term, check refinance break-even, and see your full amortization schedule.
- Full PITI Payment
- Extra Payments
- Amortization Schedule
- Refinance Break-Even
- Affordability Check
- 15 vs 30 Years
Model the impact of paying extra. Uses the same home price, loan and rate from the Monthly Payment tab above.
Compare your current loan to a potential refinance. Break-even point tells you how long until the monthly savings pay back the closing costs.
Current loan
New loan
Uses the standard 28/36 debt-to-income rule. The front-end ratio caps housing at 28% of gross monthly income; the back-end ratio caps total debt at 36%.
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Yearly breakdown — principal vs interest
Breakdown
What Your Mortgage Payment Really Includes
Most online calculators show you the principal and interest figure and stop there. On a typical $400,000 home with 20% down, the loan payment might be about $2,022 per month — but the actual amount that leaves your bank account every month is usually 20–40% higher. The difference comes from four costs that all show up in the same payment.
Principal & interest
The loan repayment itself. On a 30-year loan, about 80% of your first payment goes to interest and only 20% reduces the balance. That ratio flips around year 18.
Property tax
Collected monthly into escrow and paid to the county. Typically 0.5–2.5% of the home value per year depending on your location. This is often the second-largest part of the payment.
Home insurance
Required by the lender. Typically $1,200–$2,400 per year depending on the home value, location and coverage. Flood or wind insurance is extra and can double this in coastal areas.
PMI (if under 20% down)
Private mortgage insurance protects the lender if you default. Costs 0.3–1.5% of the loan per year. On a $320,000 loan, that is $80–$400 per month. It drops off automatically at 80% loan-to-value.
How the parts compare on a typical loan
| Component | Typical monthly amount | Percent of payment | Goes to |
|---|---|---|---|
| Principal & interest | $2,022 | ~68% | Lender — reduces loan balance over time |
| Property tax | $400 | ~13% | County / municipality — escrow account |
| Home insurance | $150 | ~5% | Insurance company — escrow account |
| PMI (if LTV > 80%) | $133 | ~5% | PMI provider — ends at 80% LTV |
| HOA fees | $250 | ~9% | Homeowners association |
| Total out-the-door payment | |||
| PITI + HOA | $2,955 | 100% | — |
That is a 46% higher monthly cost than the principal and interest figure alone. Buying based on the P&I number and then discovering the real payment is a common and expensive mistake. Always budget against the full PITI figure.
The Power of Extra Payments
Adding even a small amount to your monthly payment shortens the loan far more than most people expect, because every extra dollar goes straight to principal. Reducing principal early in the loan is disproportionately powerful — it removes future interest from every remaining month.
Impact on a $320,000 loan at 6.5% over 30 years
| Extra payment | New payoff time | Interest saved | Effective return |
|---|---|---|---|
| $0 extra | 30 years | — | — |
| $100 per month | 25 years 4 months | $71,000 | Better than most bonds |
| $200 per month | 22 years 2 months | $117,000 | Equivalent to a 6.5% guaranteed return |
| $500 per month | 16 years 8 months | $203,000 | Retires the loan 13 years early |
| $1,000 per month | 11 years 5 months | $262,000 | Almost one full loan paid off in savings |
| $20,000 lump sum at month 12 | 27 years 8 months | $68,000 | Immediate principal reduction |
Extra payments reduce the principal balance immediately, not interest. This shortens the amortization period, which in turn reduces total interest. Always specify "apply to principal" when making extra payments — some servicers apply it to the next month's scheduled payment instead.
How to Read an Amortization Schedule
An amortization schedule shows every payment over the life of the loan, split between principal and interest. The single most important thing to understand is the front-loaded interest curve: on a 30-year loan, you do not pay off half the principal until around year 18.
Interest first
In month 1, interest is calculated on the full loan balance. On a $320,000 loan at 6.5%, month 1 interest is $1,733. Of the $2,022 payment, only $289 goes to principal.
The crossover
Every month, the principal portion grows. Around month 216 (year 18) on a 30-year loan, principal finally exceeds interest. From that point forward, most of your payment reduces the balance.
Total interest doubles the price
On a 30-year $320,000 loan at 6.5%, you pay roughly $408,000 in interest over the life of the loan. The house effectively costs more than twice the purchase price before taxes and insurance.
Shorter terms save a fortune
A 15-year loan at the same rate pays roughly half the interest of a 30-year loan — but the monthly payment is around 40% higher. The question is whether the monthly cash flow difference is worth the total savings.
15-Year vs 30-Year Mortgage
Both are fixed-rate loans with the same math. The trade-off is simple: a shorter term means a higher monthly payment but dramatically less interest paid over the loan's life.
| Item | 30-year at 6.5% | 15-year at 6.0% | Difference |
|---|---|---|---|
| Loan amount | $320,000 | $320,000 | — |
| Monthly P&I | $2,022 | $2,701 | +$679/month |
| Total interest paid | $408,000 | $166,000 | −$242,000 |
| Payoff after | 30 years | 15 years | 15 years sooner |
| Total cost of loan | $728,000 | $486,000 | −$242,000 |
| Effective interest per dollar | $1.28 | $0.52 | 60% less |
The 15-year saves six figures in interest but costs an extra $679 per month. If you can comfortably afford the higher payment, the math strongly favours 15 years. If not, take the 30-year and pay extra when you can — you get the flexibility of the lower required payment while still saving interest.
Refinance Break-Even
Refinancing replaces your current loan with a new one, usually at a lower rate. It costs money upfront (closing costs) and saves money every month. The break-even point is how many months of savings it takes to recover the upfront cost.
Cost to refinance
Typically 2–5% of the loan amount. On a $320,000 loan, expect $6,500–$16,000 in total closing costs including appraisal, title, origination and recording fees.
Monthly savings
The difference between your old and new payment. A 1.5% rate drop on a $320,000 loan typically saves $300–$350 per month.
Break-even point
Closing costs divided by monthly savings. A $6,500 cost divided by $300/month savings = 22 months. If you plan to stay in the home longer than that, refinancing is worth it.
Reset vs continue
A new 30-year loan resets the amortization clock. If you are 10 years into a 30-year loan, refinancing to 30 years extends your payoff by a decade even if the payment drops. Consider a 20-year term to keep the payoff close.
First-Time Buyer Notes
20% down avoids PMI
PMI is required when your down payment is less than 20%. It costs 0.3–1.5% of the loan per year and does not reduce your principal. Every additional 1% of down payment reduces PMI and total cost.
Do not skip the inspection
An inspection costs $300–$600 and can reveal problems worth tens of thousands. It is one of the highest-return investments in the buying process, and skipping it to speed up closing is almost always a mistake.
Get a loan estimate
Lenders must provide a Loan Estimate within 3 business days of application. It breaks down the rate, monthly payment, closing costs and any variable items. Compare at least three lenders before committing.
Budget for closing costs
Closing costs are 2–5% of the purchase price. On a $400,000 home that is $8,000–$20,000 beyond the down payment. Have this cash ready in addition to your down payment.
Rate lock protection
A rate lock guarantees your rate for 30–90 days while the loan processes. Locks usually cost 0.25–0.5% of the loan amount. In a rising rate environment, a lock can save you tens of thousands over the loan's life.
Fixed beats adjustable
Fixed-rate loans lock the rate for the full term. Adjustable-rate mortgages (ARMs) start lower but can rise sharply after the fixed period. Unless you plan to sell within 5–7 years, a fixed rate is almost always the safer choice.
How the Calculator Works
Every figure on this page comes from standard mortgage formulas used by lenders and the CFPB. There is no black box — you can reproduce the numbers on paper.
Loan amount
Home price minus down payment.
Monthly P&I
Standard amortization formula from principal, monthly rate and total months.
Escrow costs
Property tax and insurance divided by 12, added to the payment.
PMI calculation
If LTV exceeds 80%, PMI is added based on the annual rate and drops off automatically once the balance reaches 80% LTV.
Amortization simulation
Month-by-month balance tracking gives the exact split between interest and principal, and the exact payoff date.
Extra payments
Additional principal reduces the balance directly, shortening the loan and lowering total interest.
Formulas Used
Monthly P&I
Standard amortization formula used by every lender.
M = P × r(1+r)^n ÷ ((1+r)^n − 1)
Total cost
Total amount paid over the life of the loan.
Total = M × n
Break-even (refi)
Months of savings needed to recover closing costs.
Break-even = Costs ÷ Monthly savings
Max home price
Backs out affordability from the DTI limit.
Housing = Income × DTI limit − Debts
Worked Mortgage Examples
| Scenario | Loan | Rate / term | Monthly P&I | Total interest |
|---|---|---|---|---|
| Starter home | $240,000 | 6.5% / 30 yr | $1,517 | $306,000 |
| Move-up home | $400,000 | 6.5% / 30 yr | $2,528 | $510,000 |
| 15-year refinance | $320,000 | 6.0% / 15 yr | $2,701 | $166,000 |
| Low-rate era loan | $320,000 | 3.0% / 30 yr | $1,349 | $166,000 |
| Jumbo loan | $800,000 | 6.75% / 30 yr | $5,188 | $1,068,000 |
| With $200 extra per month | $320,000 | 6.5% / 30 yr | $2,022 + $200 | $291,000 (saves $117K) |
Mortgage Terms Glossary
| Term | Meaning |
|---|---|
| PITI | Principal, Interest, Taxes, Insurance — the four components of a standard monthly mortgage payment. |
| PMI | Private Mortgage Insurance. Required when down payment is under 20% of the purchase price. Protects the lender, not the buyer. |
| LTV | Loan-to-Value ratio. Loan amount divided by home value. PMI typically drops off when LTV reaches 80%. |
| DTI | Debt-to-Income ratio. Total monthly debt payments divided by gross monthly income. 28/36 is the classic rule, 43% is the QM cap. |
| Escrow | An account held by the lender to collect and pay property tax and insurance on your behalf. |
| APR | Annual Percentage Rate. Includes the interest rate plus lender fees, giving a truer cost of borrowing than the rate alone. |
| Amortization | The schedule of payments over the loan term, showing how much goes to principal vs interest each month. |
| Rate lock | A lender's guarantee that your interest rate will not change for a set period (usually 30–90 days) while the loan processes. |
| Break-even point | For refinancing, the number of months it takes for monthly savings to exceed the upfront closing costs. |
| Conforming loan | A mortgage that meets Fannie Mae and Freddie Mac limits. For 2024 the baseline limit was $766,550 for a single-family home. |
People Also Ask
How is a monthly mortgage payment calculated?
The lender uses the standard amortization formula: M = P × r(1+r)^n ÷ ((1+r)^n − 1), where P is the loan amount, r is the monthly interest rate and n is the total number of payments. Property tax, homeowners insurance, PMI (if applicable) and HOA fees are then added on top to give the full monthly payment.
What is PITI and why does it matter?
PITI stands for Principal, Interest, Taxes, Insurance. It is the full monthly payment a lender uses to qualify you, and it is what actually leaves your bank account. A common mistake is budgeting only for principal and interest, which can understate the real payment by 20–40%.
How much down payment do I need?
20% down avoids PMI and is the traditional benchmark. Conventional loans allow as low as 3% down; FHA loans allow 3.5%; VA loans (for veterans) allow 0%. Anything under 20% triggers PMI, which costs 0.3–1.5% of the loan per year and does not reduce your principal balance.
What is PMI and when does it drop off?
Private Mortgage Insurance protects the lender if you default. It is required when your loan-to-value ratio is above 80%. Under the Homeowners Protection Act, your servicer must automatically cancel PMI when your balance reaches 78% of the original value. You can often request cancellation at 80% LTV with a new appraisal.
How much house can I afford?
Use the 28/36 rule. Your housing payment (PITI) should be under 28% of gross monthly income, and total debt payments should be under 36%. On a $120,000 annual income ($10,000/month), that is $2,800 for housing and $3,600 total. The Affordability tab of this calculator runs the exact numbers for your income, debts and down payment.
Does paying extra on my mortgage really help?
Yes, dramatically. On a $320,000 loan at 6.5% over 30 years, adding $200 per month saves roughly $117,000 in interest and pays the loan off about 8 years early. The earlier in the loan you start, the bigger the effect, because reducing principal removes future interest from every remaining payment.
Should I choose a 15-year or 30-year mortgage?
A 15-year loan saves roughly 50% of total interest but the monthly payment is around 40% higher. If the higher payment fits comfortably in your budget, the 15-year is the better financial decision. If it would strain your cash flow, take the 30-year and pay extra when you can — you keep the lower required payment as a safety net.
Is refinancing worth it?
Refinancing is worth it if your break-even point is shorter than how long you plan to stay in the home. Break-even is closing costs divided by monthly savings. If a $6,500 refinance saves $300/month, break-even is 22 months. Stay longer than that and you are ahead. Also consider that a new 30-year loan resets the amortization clock — sometimes a 20-year term keeps the payoff date closer.
What is the difference between interest rate and APR?
The interest rate is what the lender charges on the loan balance. The APR includes the interest rate plus most lender fees (origination, points, mortgage insurance) spread over the loan term. APR is usually higher than the interest rate, and is a better comparison tool across lenders because it captures the total cost of borrowing.
How much are closing costs on a mortgage?
Closing costs typically run 2–5% of the purchase price. On a $400,000 home, expect $8,000–$20,000. They include lender origination fees, appraisal, title search and insurance, recording fees, prepaid property tax and insurance, and any points paid to reduce the rate. Your Loan Estimate (provided within 3 business days of application) breaks down every fee.
What credit score do I need for a mortgage?
Conventional loans typically need a 620 minimum. FHA loans allow down to 580 with 3.5% down (or 500 with 10% down). VA loans have no official minimum but most lenders want at least 620. Above 740 usually gets the best rates. The score matters most for the rate you are offered — a 100-point difference can change the rate by 0.5% or more.
Does making bi-weekly payments help?
Yes, but not because of anything magic about bi-weekly. Paying half your monthly payment every two weeks means you make 26 half-payments per year, which equals 13 full payments. That one extra full payment per year reduces principal and shortens the loan by 4–6 years on a 30-year mortgage, saving tens of thousands in interest. You can achieve the same result by making one extra full payment once a year.
Should I pay off my mortgage early or invest the money?
The math depends on your mortgage rate vs expected investment returns. Paying down a 6.5% mortgage gives a guaranteed 6.5% return (tax-free in most cases). Historic stock market returns average about 7–10% but are not guaranteed. If your rate is above 6%, prepaying is a strong choice for risk-averse borrowers. If your rate is below 4%, investing usually wins over the long run.
What happens if I miss a mortgage payment?
Most mortgages have a 15-day grace period before a late fee (typically 4–5% of the payment) applies. Missing one payment usually triggers a late fee and a mark on your credit report. Missing three consecutive payments typically starts the formal default process. Contact your servicer immediately if you cannot pay — loss mitigation options like forbearance or modification are available before foreclosure begins.
Is this calculator free and does it store my data?
Yes and no. Every calculation runs entirely in your browser — nothing is sent to a server, nothing is stored. Your inputs are not saved anywhere. The only thing remembered is the rating counter, which uses your browser's local storage and never leaves your device.
Amortization follows the Truth in Lending Act (TILA) and CFPB Regulation Z. The 28/36 debt-to-income rule is the long-standing underwriting guideline; the current Qualified Mortgage cap is 43% DTI. Conforming loan limits are set annually by the FHFA. Weekly average mortgage rates are published by Freddie Mac's Primary Mortgage Market Survey (PMMS). PMI cancellation rules follow the Homeowners Protection Act of 1998.
Budget against PITI plus HOA, never against principal and interest alone. Use the 28/36 rule to size the loan: housing under 28% of gross monthly income, total debt under 36%. On the extra payment side, remember the amortization crossover sits around year 18 on a 30-year loan — every extra dollar before that point has more leverage than a dollar paid after. And when comparing loans, always compare the APR, not just the rate.
Related Calculators
References
- Consumer Financial Protection Bureau. Regulation Z — Truth in Lending Act disclosure requirements. CFPB, current edition.
- Federal Housing Finance Agency. Conforming Loan Limits. FHFA, updated annually.
- Freddie Mac. Primary Mortgage Market Survey (PMMS) — weekly average mortgage rates.
- U.S. Department of Housing and Urban Development. FHA Single Family Housing Handbook 4000.1 — underwriting and DTI rules.
- Homeowners Protection Act of 1998. U.S. Code Title 12, Chapter 49 — PMI cancellation and termination rules.
This calculator provides estimates only and is not a loan offer or commitment to lend. Your actual rate, monthly payment and closing costs depend on your lender, credit score, location and full financial picture. Always compare Loan Estimates from at least three lenders before committing.