How to use the mortgage calculator
Start with the price and your down payment. The calculator subtracts one from the other to get the loan amount, so you don't need to work that out first. Taxes and insurance go in as yearly amounts because that's how tax bills and insurance quotes show them. PMI and HOA dues go in as monthly amounts.
Leave a cost at zero only when it doesn't apply. A blank property tax field is the most common reason an online estimate comes in hundreds of dollars below the lender's number.
- Enter the home price and the cash you'll put down.
- Enter the fixed interest rate from a quote and the loan term in years.
- Add the annual property tax and annual homeowners insurance premium.
- Add monthly mortgage insurance from a lender estimate if you're putting less than 20% down, and any monthly HOA dues.
- Add estimated closing costs if you want a rough cash-to-close figure. They stay out of the monthly payment.
- Press calculate, then check the payment breakdown, LTV, total interest and the payment schedule.
Monthly mortgage payment example: $350,000 home
Take a $350,000 home with $70,000 down. That's 20% down, so the loan is $280,000 and the loan-to-value ratio is 80%. At 6.5% for 30 years, principal and interest come to $1,769.79 a month.
Annual property tax of $3,600 adds $300 a month and a $1,200 insurance premium adds $100. The full payment is $2,169.79. In month one, $1,516.67 of the principal-and-interest payment is interest and only $253.12 pays down the loan. After 12 payments you still owe $276,870.37.
If you also enter $8,000 of closing costs, the simple cash-to-close plan is $78,000. Your official figure can differ once deposits, credits, prepaids and escrow funding are counted.
| Part of the payment | Monthly | Where it comes from |
|---|---|---|
| Principal and interest | $1,769.79 | $280,000 loan amortized over 360 months |
| Property tax | $300.00 | $3,600 a year / 12 |
| Homeowners insurance | $100.00 | $1,200 a year / 12 |
| PMI | $0.00 | Not needed at 20% down in this example |
| Total monthly payment | $2,169.79 | PITI with no HOA dues |
The monthly mortgage payment formula
Principal and interest use the standard fixed-rate amortization formula. Everything else is simple division and addition: yearly tax and insurance are split into 12 parts, then PMI and HOA are added as they are.
The formula assumes the same rate and payment for the whole term. If your Loan Estimate shows a slightly different number, lender rounding and escrow rules are the usual reasons.
Loan amount P = home price - down paymentMonthly rate r = annual rate / 100 / 12Number of payments n = years x 12Principal and interest = P x r / (1 - (1 + r)^(-n))Monthly payment = principal and interest + tax / 12 + insurance / 12 + PMI + HOA
Mortgage calculator with PMI: when mortgage insurance applies
Conventional lenders usually require private mortgage insurance when you put down less than 20%. The calculator doesn't guess the premium because it depends on your credit, down payment and loan, so enter the monthly amount from your lender's estimate.
Here's how it changes the example. Put $35,000 down (10%) on the same $350,000 home and the loan becomes $315,000. Principal and interest rise to $1,991.01. With $300 of tax, $100 of insurance and, say, a $150 PMI quote, the payment is $2,541.01.
PMI doesn't last forever. The CFPB explains the rules. You can ask your servicer to cancel it once the balance is scheduled to reach 80% of the home's original value, and the servicer must drop it automatically at 78% if you're current. On that $315,000 loan, the scheduled balance hits $280,000 (80%) at payment 95 and $273,000 (78%) at payment 109. Check those months in the payment schedule.
| Milestone | Balance | Scheduled payment number |
|---|---|---|
| Loan starts at 90% of value | $315,000 | 0 |
| You can request PMI cancellation (80%) | $280,000 | 95 (about 7 years 11 months) |
| PMI ends automatically (78%) | $273,000 | 109 (about 9 years 1 month) |
How rate and term change the payment
Small rate changes matter because they apply to 360 payments. On the same $280,000 loan, going from 6.5% to 7.5% adds $188.01 a month and $67,683.65 of interest over 30 years.
A 15-year term costs more each month but cuts interest by more than half. Run your own numbers with the rate you're quoted for each term, since 15-year rates are often lower than 30-year rates.
| Rate and term | Monthly P&I | Total interest |
|---|---|---|
| 6.5% for 30 years | $1,769.79 | $357,124.57 |
| 7.5% for 30 years | $1,957.80 | $424,808.22 |
| 6.5% for 15 years | $2,439.10 | $159,038.11 |
When to double-check the estimate
This is a planning number, not a quote. It doesn't pull live rates, check whether you qualify, or decide if you need mortgage insurance. Property taxes can be reassessed after a sale, insurance premiums change at renewal, and HOAs can raise dues or add special assessments.
Before you commit, line the result up against your Loan Estimate and later the Closing Disclosure. Those documents show the lender's escrow amounts, fees and cash to close for your actual loan.
- Adjustable-rate loans: the payment here assumes one fixed rate for the whole term.
- Escrow cushions and shortages: your servicer can collect more than tax and insurance divided by 12.
- FHA, VA and USDA loans: their mortgage insurance and funding fees follow separate rules, so enter the lender's figures.
- Flood, wind or earthquake coverage: add it to the insurance figure if your property needs it.
Sources
These CFPB pages explain the documents and rules behind a mortgage payment estimate. Use your lender's documents for figures on your own loan.