How is a mortgage payment calculated?

Your monthly payment is calculated using the 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 and insurance are added on top.

How much house can I afford?

A common guideline is the 28/36 rule: spend no more than 28% of your gross monthly income on housing costs, and no more than 36% on total debt. Use this calculator with your actual numbers to see what fits your budget.

Should I put 20% down?

Putting 20% down avoids private mortgage insurance (PMI) and gives you a lower monthly payment. But if it would drain your emergency fund, a smaller down payment with PMI might make more sense.

How does the interest rate affect my payment?

Even small rate changes make a big difference. On a $320,000 loan, the difference between 6% and 7% is roughly $200/month — or $72,000 over 30 years.

What is included in a monthly mortgage payment?

A typical payment includes principal, interest, property tax, and homeowner's insurance (often called PITI). Some loans also include PMI or HOA fees.

What is the difference between a 15-year and 30-year mortgage?

A 15-year mortgage has higher monthly payments but saves you a huge amount on interest. For example, a $300,000 loan at 6.5% costs about $158,000 in total interest over 15 years versus $383,000 over 30 years. That is a $225,000 difference. The tradeoff is roughly $700 more per month.

Can I remove PMI later?

Yes. Under the Homeowners Protection Act of 1998, your lender must automatically cancel PMI when your loan balance reaches 78% of the original home value. You can also request cancellation at 80%. Some homeowners reach this milestone faster by making extra principal payments or getting a new appraisal after significant home value appreciation.

Should I pay discount points to lower my rate?

One discount point costs 1% of your loan amount and typically reduces your rate by about 0.25%. On a $400,000 loan, that is $4,000 upfront to save roughly $60/month. You break even after about 67 months — just over 5.5 years. If you plan to stay in the home longer than that, points usually pay off. If you might move within five years, skip them.

Mortgage Calculator — Estimate Your Monthly Payment

Estimate your monthly mortgage payment. Includes principal, interest, property tax, and insurance. Move the sliders to see how each factor changes your payment.

Principal & Interest	$2,023/mo
Property Tax	$300/mo
Insurance	$100/mo
Loan Amount	$320,000
Total Interest	$408,143

How to Use This Mortgage Calculator

Start with the home price. Slide it to the price range you are shopping in, or type an exact number. Next, set your down payment — either as a dollar amount or a percentage. The loan amount updates automatically.

Pick your loan term. Thirty years is the most common, but 15 and 20-year options show up too. Then enter the interest rate. As of March 2026, Freddie Mac's Primary Mortgage Market Survey reports a national average of 6.73% for a 30-year fixed-rate mortgage (source: Freddie Mac PMMS). Your actual rate depends on your credit score, debt-to-income ratio, and the lender you choose.

Don't skip the tax and insurance fields. A lot of people only look at principal and interest, then get blindsided when the real payment is $400 higher than they expected. Property tax varies wildly by state — New Jersey averages 2.23% of home value while Hawaii sits at 0.32%, according to the Tax Foundation's 2025 data. Homeowner's insurance averages about $1,900/year nationally per the Insurance Information Institute.

Every time you adjust a slider, the payment updates instantly. No buttons to click. No page reloads. Play around with different combinations until you find a monthly number that feels comfortable.

How Mortgage Payments Work

Your monthly mortgage payment is not one thing. It is four things smashed together, and lenders call the bundle PITI: principal, interest, taxes, and insurance.

Principal

This is the portion that actually pays down what you owe. In the early years of a 30-year mortgage, the principal piece is tiny — sometimes less than 20% of your payment. That feels terrible, honestly. You are writing a $2,200 check every month and only $400 goes toward the actual debt. But it accelerates over time. By year 20, most of your payment chips away at the balance.

Interest

Interest is the lender's profit. It is calculated monthly on whatever balance remains. That is why early payments are interest-heavy: the balance is at its highest, so the interest charge is at its highest. On a $350,000 loan at 6.73%, your first month's interest charge alone is about $1,963. That stings.

Taxes and Insurance

Most lenders collect property tax and homeowner's insurance monthly and hold the money in an escrow account. When the tax bill or insurance premium is due, the lender pays it from escrow. You never see a separate bill, but the money is definitely leaving your bank account every month. Don't fall for the trap of ignoring these costs when budgeting. A $300,000 house in Texas with a property tax rate near 1.60% means roughly $400/month just in taxes.

Amortization: Why the Split Changes Over Time

Amortization is the schedule that determines how each payment gets divided between principal and interest. Early on, interest dominates. Late in the loan, principal dominates. The total payment stays the same (assuming a fixed rate), but the internal split shifts every single month. After about 22 years on a typical 30-year mortgage at current rates, you finally cross the point where more than half of each payment goes to principal. That is a long wait, which is exactly why extra principal payments early in the loan save so much money.

The Mortgage Payment Formula

The standard fixed-rate mortgage payment formula:

M = P × [ r(1 + r)ⁿ ] / [ (1 + r)ⁿ − 1 ]

M = monthly payment (principal + interest only)
P = loan principal (home price minus down payment)
r = monthly interest rate (annual rate ÷ 12)
n = total number of payments (loan term in years × 12)

Quick example. $300,000 loan, 6.73% rate, 30 years. Monthly rate r = 0.0673 / 12 = 0.005608. Number of payments n = 360. Plug those numbers in and you get M = $1,943. That is principal and interest only — add taxes and insurance for the real number.

This formula assumes a fixed rate. Adjustable-rate mortgages (ARMs) recalculate periodically based on a benchmark index, which makes the math different after each adjustment period.

Real-World Examples

Example 1: Starter Home in the Midwest

Home price: $240,000. Down payment: $12,000 (5%). Loan amount: $228,000. Rate: 6.73% for 30 years. Monthly principal and interest: $1,476. Property tax at 1.10%: $220/month. Insurance: $140/month. PMI at 0.55%: $105/month.

Total monthly payment: $1,941. Notice that PMI adds $105/month. That is $1,260/year you are paying purely because the down payment was under 20%. Once your balance drops to $192,000 (80% of the original home value), you can request PMI cancellation. With normal payments, that takes about 8 years.

Example 2: Suburban Family Home

Home price: $425,000. Down payment: $85,000 (20%). Loan amount: $340,000. Rate: 6.50% for 30 years. Monthly principal and interest: $2,149. Property tax at 1.35%: $478/month. Insurance: $175/month. No PMI.

Total monthly payment: $2,802. The 20% down payment eliminates PMI entirely, saving about $156/month compared to a 5% down scenario. Over the full 30 years, total interest paid is approximately $433,600. That is more than the original loan amount. Honestly, seeing that number for the first time is a bit shocking — you pay for the house almost twice.

Example 3: Aggressive 15-Year Payoff

Same $425,000 home. Same $85,000 down. Loan amount: $340,000. Rate: 5.92% (15-year rates are typically lower; Freddie Mac reported 5.92% average for 15-year fixed in March 2026). Monthly principal and interest: $2,856. Taxes: $478/month. Insurance: $175/month.

Total monthly payment: $3,509. That is $707 more per month than the 30-year option. But total interest drops to about $174,000 — a savings of roughly $259,600 over the life of the loan. If you can handle the higher payment, the 15-year path is dramatically cheaper. That's a terrible idea, though, if it leaves you with zero savings buffer. Always keep 3-6 months of expenses in cash before accelerating mortgage payoff.

5 Tips for Getting a Better Mortgage

Check your credit score 6 months before applying. Pull reports from all three bureaus at AnnualCreditReport.com. Fix errors and pay down credit card balances below 30% utilization. The difference between a 740 and 680 score can mean 0.50% or more on your rate — which translates to tens of thousands over the loan's life.
Get quotes from at least three lenders. The Consumer Financial Protection Bureau found that borrowers who compared five lenders saved an average of $3,000 over the life of their loan versus those who went with the first offer. Don't fall for the comfort of just using your current bank. Shop around. It takes a weekend of phone calls.
Lock your rate at the right time. Rate locks typically last 30-60 days. If you lock too early and closing gets delayed, you might need an extension (which costs money). If you wait too long and rates spike, you are stuck. Ask your loan officer about float-down provisions that let you take a lower rate if the market drops after you lock.
Do not make large purchases before closing. That new car or furniture set can wreck your debt-to-income ratio and tank your approval. Lenders re-pull credit before closing. Every mortgage officer has a horror story about a buyer who lost their approval because they financed a $35,000 truck the week before closing day. Wait until after you have the keys.
Consider the total cost, not just the monthly payment. A 30-year mortgage has a lower monthly payment than a 15-year, but you could end up paying $150,000-$250,000 more in interest. Run both scenarios in the calculator above and compare the total interest paid. The monthly savings might not be worth the long-term cost — especially if your budget can handle the higher payment.

I nearly went with the first lender who pre-approved me — a local credit union. My coworker Mark literally grabbed my arm and said "get three quotes minimum." I thought he was being dramatic. The credit union offered 6.875%. A broker I found on Bankrate offered 6.5%. That 0.375% gap? About $78/month on my loan size. Over 30 years that's twenty-eight thousand dollars. Mark got a nice bottle of whiskey that Christmas.

Year two of homeownership, I got a letter from my lender saying my payment was going up $140/month. Almost had a heart attack. Turns out the county reassessed property values and my taxes jumped about $1,100 for the year. The escrow account didn't have enough to cover it, so they spread the shortage across my monthly payments. Nobody tells you this can happen. I mean, maybe it's in the closing docs somewhere in page 47 of 200, but still. Now I check the county assessor's website every October like a paranoid person.