Mortgage Calculator
A mortgage payment is rarely just principal and interest. This calculator adds property tax and homeowners insurance so the monthly figure matches what a lender will actually escrow — the number that matters when you are deciding between a 400,000 house with cheap taxes and a 360,000 house in a district that taxes twice as hard.
Inputs
Result
2,422.62 / month
Principal & interest 2,022.62 · Loan 320,000
Visual breakdown
How the mortgage calculator works
The loan itself is amortised: Monthly P&I = P × r × (1 + r)^n ÷ ((1 + r)^n − 1), where P is the price minus your down payment, r is the annual rate divided by 12, and n is the term in months.
Tax and insurance are then divided by 12 and added on top, which is how a servicer builds the escrow portion of your bill. The result is a PITI figure: principal, interest, taxes, insurance.
Because r is a monthly rate, a quoted 6.5% becomes 0.0054167 per month. Feeding 6.5 straight into the formula inflates the payment roughly twelvefold — the single most common arithmetic slip in mortgage maths.
Worked example: 400,000 home, 20% down, 6.5% over 30 years
- Loan amount: 400,000 − 80,000 down = 320,000.
- Monthly rate: 6.5 ÷ 12 ÷ 100 = 0.0054167. Payments: 30 × 12 = 360.
- P&I: 320,000 × 0.0054167 × 1.0054167^360 ÷ (1.0054167^360 − 1) ≈ 2,022 per month.
- Escrow: 3,600 property tax ÷ 12 = 300, plus 1,200 insurance ÷ 12 = 100.
- Total PITI ≈ 2,422 per month. Over the full term the interest alone comes to roughly 408,000 — more than the loan itself.
Common mistakes to avoid
Budgeting off P&I instead of PITI
Taxes and insurance routinely add 15–25% to the payment. Buyers who shop on the P&I figure alone often find their approved price bracket shrinks once escrow is included.
Assuming a bigger down payment always wins
It lowers the payment, but draining your reserves to reach 20% can leave nothing for closing costs, moving, or the first repair. Compare the payment saving against the cost of having no cash buffer.
Ignoring PMI below 20% equity
Under 20% down, most lenders add private mortgage insurance. It is not part of the amortisation formula, so add it separately until your balance crosses the 80% loan-to-value line.
Frequently asked questions
What does PITI stand for on a mortgage estimate?
Principal, interest, taxes and insurance — the four parts of a typical escrowed monthly bill. Lenders qualify you on PITI, not on principal and interest alone.
How much house can I afford on a 6.5% rate?
Work backwards from your target payment. Most underwriters want housing costs under about 28% of gross income and total debt under 36%; the debt-to-income calculator makes that check quickly.
Does paying extra each month actually help?
Substantially, and early payments help most. An extra 200 a month on the example above clears the loan roughly five years early because each additional dollar removes decades of compounding interest.
Why is my first statement almost all interest?
Interest is charged on the outstanding balance, which is at its largest on day one. On a 320,000 loan at 6.5%, the first payment is about 1,733 interest and only 289 principal.
Should I choose a 15-year or 30-year term?
A 15-year term raises the payment by roughly 40% but cuts lifetime interest by more than half. Choose the shorter term only if the higher payment still leaves room for savings.
Are property taxes fixed for the life of the loan?
No. Assessments are re-run periodically, so the escrow portion drifts upward over time even when your rate is fixed.
Learn more
The Practical Mortgage Guide
How amortisation splits your payment between interest and principal.
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