Mortgage Calculator - Estimate Your Monthly House Payments
Calculate your monthly mortgage payments with our free mortgage calculator. Include property taxes, insurance, PMI and see an amortization schedule for your home loan.
Our Mortgage Calculator helps you determine your monthly house payment including principal, interest, property taxes, homeowners insurance, and PMI. Enter your loan details to see a complete payment breakdown and amortization schedule.
How This Tool Works
Our mortgage calculator uses standard formulas to determine your monthly mortgage payment:
Monthly Principal & Interest = P × r × (1 + r)^n / [(1 + r)^n - 1]
Where:
- P: Principal loan amount
- r: Monthly interest rate (annual rate ÷ 12)
- n: Total number of payments (years × 12)
The calculator also considers:
- Property Tax: Annual amount divided by 12 for monthly payment
- Homeowner's Insurance: Annual premium divided by 12
- PMI (Private Mortgage Insurance): Typically required when down payment is less than 20%. Calculated as an annual percentage of the loan amount, divided by 12 for monthly payment
The total monthly payment is the sum of all these components. The amortization schedule shows how each payment is split between principal and interest, and how the loan balance decreases over time.
Frequently Asked Questions
What is included in a mortgage payment?
A typical mortgage payment consists of four components, often referred to as PITI:
- Principal: The amount that goes toward paying off the original loan amount
- Interest: The cost of borrowing money, paid to the lender
- Taxes: Property taxes collected by your lender and paid to your local government
- Insurance: Homeowner's insurance and, if required, private mortgage insurance (PMI)
Some homeowners also pay HOA (Homeowners Association) fees, but these are typically paid separately from the mortgage payment.
What is PMI and when is it required?
PMI (Private Mortgage Insurance) is insurance that protects the lender if you stop making payments on your loan. It's typically required when your down payment is less than 20% of the home's purchase price, resulting in a loan-to-value (LTV) ratio greater than 80%.
PMI usually costs between 0.3% and 1.5% of your loan amount annually, depending on your down payment amount and credit score. Once your loan balance drops to 80% of your home's original value, you can request to have PMI removed. By law, lenders must automatically terminate PMI when your loan balance reaches 78% of the original value.
How much house can I afford?
Financial experts typically recommend that your monthly housing costs (including mortgage, property taxes, and insurance) should not exceed 28% of your gross monthly income. Additionally, your total debt payments (including mortgage, car loans, student loans, etc.) should not exceed 36% of your gross monthly income.
To determine how much house you can afford:
- Calculate 28% of your gross monthly income to find your maximum monthly housing payment
- Subtract estimated monthly property taxes and insurance from this amount
- The remaining amount is what you can spend on principal and interest
- Use this figure with current interest rates and your loan term to calculate your maximum affordable loan amount
- Add your down payment to find your maximum affordable home price
Remember to also consider other homeownership costs such as maintenance, utilities, and possible HOA fees when determining affordability.
Is it better to get a 15-year or 30-year mortgage?
Both 15-year and 30-year mortgages have advantages and disadvantages:
15-Year Mortgage:
- Lower interest rates (typically 0.5% to 1% lower than 30-year loans)
- Build equity faster
- Pay off your home in half the time
- Pay significantly less total interest over the life of the loan
- Higher monthly payments (often 40-50% higher than a 30-year mortgage)
- Less flexibility in your monthly budget
30-Year Mortgage:
- Lower monthly payments, allowing you to buy more house for the same monthly payment
- More budget flexibility
- Option to make extra payments when possible to pay off faster
- Ability to invest the difference elsewhere for potentially higher returns
- Higher interest rates
- Pay more total interest over the life of the loan
- Build equity more slowly
The best choice depends on your financial situation, goals, and comfort level. If you can comfortably afford the higher payments of a 15-year mortgage, it will save you money in the long run. If you prefer lower monthly payments or want to maximize cash flow for other investments or expenses, a 30-year mortgage might be better.
Tips and Best Practices
Tips for managing your mortgage effectively:
- Make extra principal payments: Even small additional payments toward the principal can significantly reduce your total interest and shorten your loan term. Consider making one extra payment per year or rounding up your monthly payment.
- Set up biweekly payments: Instead of 12 monthly payments per year, make half your mortgage payment every two weeks. This results in 26 half-payments, or 13 full payments per year, helping you pay off your mortgage faster and save on interest.
- Refinance when it makes sense: If interest rates drop significantly below your current rate, consider refinancing. A good rule of thumb is to refinance if you can reduce your rate by at least 0.75% and plan to stay in your home long enough to recoup the closing costs.
- Consider points carefully: Paying discount points upfront to lower your interest rate may make sense if you plan to keep the loan for a long time. Calculate the breakeven point to see if it's worth it.
- Shop around for insurance: Compare homeowner's insurance quotes annually to ensure you're getting the best rate. Bundle with auto insurance for additional discounts.
- Appeal your property tax assessment: If you believe your home is assessed too high for property tax purposes, you can appeal the assessment to potentially lower your tax bill.
- Keep track of your loan-to-value ratio: Once you've built up 20% equity (80% LTV), request to have PMI removed to lower your monthly payment.
- Consider a mortgage with no closing costs: If you don't plan to stay in your home long, a slightly higher interest rate with no closing costs might be more economical than paying thousands in closing costs upfront.