Mortgage Calculator

The payment that belongs in a household budget

A quoted mortgage payment often means only principal and interest. The amount that leaves a homeowner’s checking account can also include property tax, homeowners insurance, private mortgage insurance, and HOA dues. This calculator keeps those pieces visible and reports one estimated total monthly payment.

The first-month estimate is:

principal and interest + property tax + insurance + PMI + HOA

Property tax is calculated from the home value and annual tax-rate assumption. Insurance is divided into a monthly amount. PMI is included only when the starting loan-to-value ratio is above 80%; HOA dues are optional. Taxes and insurance can change over time even when the mortgage rate is fixed.

How principal and interest are calculated

Fixed-rate mortgages use the 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 number of monthly payments. Home price minus cash down payment determines P. The formula finds the fixed payment that pays the balance and all accrued interest by the final month.

The mortgage amortization calculator expands that payment into a year-by-year schedule and shows how extra principal changes the payoff.

Worked example: from P&I to a complete estimate

Consider a $400,000 home with $60,000 down, a 6.5% fixed rate, and a 30-year term. The loan starts at $340,000 and the principal-and-interest payment is about $2,149 per month.

Now add planning estimates:

• 1.1% annual property tax: about $367 per month;
• $1,800 annual homeowners insurance: $150 per month;
• 0.6% estimated annual PMI: about $170 per month because the down payment is below 20%; and
• no HOA dues.

The complete first-month estimate is therefore roughly $2,836—not $2,149. That gap is why affordability should be tested with the full housing cost rather than the loan payment alone.

PMI and the 20% threshold

The calculator uses a transparent planning convention: when starting LTV is above 80%, estimated PMI equals the selected annual PMI percentage times the original loan amount, divided by 12. It then follows scheduled principal until the balance reaches 80% of the original home value.

That is not a promise of the actual cancellation month. Mortgage-insurance rules depend on loan type, payment history, appraisal requirements, servicer policy, and federal law. Use the down payment and PMI calculator for a focused comparison of cash down, PMI duration, and total estimated PMI.

Common mistakes

1. Using only principal and interest for affordability. Taxes, insurance, PMI, and HOA dues can add hundreds of dollars per month.
2. Entering APR as the contract rate. APR is useful for comparing fees, but the scheduled payment uses the note rate.
3. Assuming escrow stays fixed. A fixed-rate loan can still have a changing total payment when taxes or insurance premiums change.
4. Treating PMI as permanent. Many conventional borrowers can eventually remove it, but the timing and requirements vary.
5. Forgetting closing cash. The monthly payment does not include the upfront down payment and transaction costs. Use the closing costs calculator to estimate cash due at closing.

Stress-test before choosing a price

Run more than one scenario. Test a rate at least one percentage point higher, use the actual property-tax record when available, obtain an insurance quote, and add known HOA dues. If the payment only fits under optimistic assumptions, the price may not fit the household budget.

This tool is an educational estimate, not a lender quote. The Loan Estimate and Closing Disclosure for a specific transaction control the actual rate, payment, escrow deposits, and fees.