Mortgage Payment Calculator
Calculate your monthly mortgage payment including principal, interest, property tax, insurance (PITI), and PMI. Get a complete payment breakdown with detailed amortization schedules showing exactly how your mortgage costs add up over any loan term.
Payment Breakdown
Amortization Over Time
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How It Works
Mortgages use an amortization formula that calculates fixed monthly payments over the loan term. Early payments are mostly interest, while later payments go mostly toward principal. This calculator uses the standard mortgage formula to show you exactly what you'll pay each month and over the life of the loan.
The Mortgage Formula
Where:
- M = Monthly payment
- P = Principal (loan amount after down payment)
- r = Monthly interest rate (annual rate ÷ 12)
- n = Total number of payments (years × 12)
Example: For a $280,000 loan at 6.5% over 30 years:
Monthly rate = 6.5% ÷ 12 = 0.00542
Number of payments = 30 × 12 = 360
Monthly payment = $280,000 × [0.00542(1.00542)^360] / [(1.00542)^360 - 1] = $1,770
Understanding Your Payment (PITI Breakdown)
Your monthly mortgage payment typically includes four components, often called PITI:
- Principal: The amount that goes toward paying down your loan balance. In early years, only a small portion goes to principal.
- Interest: The cost of borrowing money from the lender. This is the largest component in the first years of your loan.
- Taxes: Property taxes vary widely by state, from 0.31% in Hawaii to 2.31% in Texas. On a $350,000 home, that's $1,085 to $8,085 per year.
- Insurance: Homeowners insurance typically costs $1,200-$3,000 annually, plus PMI if you put down less than 20%.
Real-World Mortgage Scenarios
See how different choices affect your total cost. These examples use current average rates and show the dramatic impact of loan terms and down payments.
Scenario 1: Standard 30-Year with 20% Down
Home Price: $350,000
Down Payment: $70,000 (20%)
Loan Amount: $280,000
Rate: 6.5% | Term: 30 years
Monthly P&I: $1,770
Total Interest: $357,600
Total Paid: $637,600
💡 Key Insight: You'll pay 127% of the loan amount in interest over 30 years. Interest costs more than the principal!
Scenario 2: 15-Year Mortgage (Save $198K)
Same loan: $280,000
Rate: 6.0% (typically 0.5% lower) | Term: 15 years
Monthly P&I: $2,363 (+$593/month)
Total Interest: $145,340
Savings vs 30-year: $212,260
💡 Key Insight: Pay $593 more per month, save $212,260 over the life of the loan. You'll be mortgage-free in half the time.
Scenario 3: 10% Down (PMI Required)
Home Price: $350,000
Down Payment: $35,000 (10%)
Loan Amount: $315,000
Rate: 6.5% | Term: 30 years
Monthly P&I: $1,991
PMI: ~$131/month (until 20% equity)
Total Monthly: $2,122
PMI Cost (8 years): $12,576
💡 Key Insight: Lower down payment means higher monthly costs. You'll pay an extra $12,576 in PMI before reaching 20% equity.
Scenario 4: Extra Principal Payments
Loan: $280,000 at 6.5% for 30 years
Standard Payment: $1,770/month
With Extra $200/month: $1,970/month
Payoff Time: 22.5 years (7.5 years early!)
Interest Saved: $108,420
Total Extra Paid: $54,000
💡 Key Insight: Paying just $200 extra per month saves you $108,420 in interest. That's a 200% return on your extra payments!
What Determines Your Mortgage Rate?
Your interest rate has the biggest impact on your total cost. Here's how lenders determine your rate and what you can expect based on your credit profile.
Credit Score Impact on Rates
Your credit score directly affects your interest rate. Even a small rate difference costs thousands over 30 years:
| Credit Score | Typical APR | Monthly Payment (on $280K) | Total Interest (30 years) |
|---|---|---|---|
| 760-850 (Excellent) | 6.25% | $1,724 | $340,640 |
| 700-759 (Good) | 6.47% | $1,762 | $354,320 |
| 660-699 (Fair) | 6.81% | $1,825 | $377,000 |
| 620-659 (Poor) | 7.35% | $1,923 | $412,280 |
The bottom line: A 100-point credit score difference costs $199/month or $71,640 over 30 years. Improving your credit before applying can save you the cost of a new car.
Other Factors That Affect Your Rate
- Loan-to-Value Ratio (LTV): Higher down payments (lower LTV) get better rates. 20% down typically qualifies for the best rates.
- Debt-to-Income Ratio (DTI): Lenders prefer DTI under 43%. Lower DTI may qualify for better terms.
- Loan Type: Conventional loans typically offer better rates than FHA/VA for high credit scores, but government-backed loans are more accessible.
- Property Type: Primary residences get better rates than investment properties or vacation homes.
- Market Conditions: Federal Reserve policy and inflation expectations drive mortgage rate trends.
Beyond Principal & Interest: The Hidden Costs
Your mortgage payment is just one part of homeownership costs. Here's what else to budget for:
Property Taxes (Varies Dramatically by State)
National Average: 1.1% of home value per year
On a $350,000 home: $3,850/year or $321/month
Highest States:
- New Jersey: 2.47% ($8,645/year)
- Illinois: 2.30% ($8,050/year)
- Texas: 2.31% ($8,085/year)
Lowest States:
- Hawaii: 0.31% ($1,085/year)
- Alabama: 0.42% ($1,470/year)
- Louisiana: 0.56% ($1,960/year)
Homeowners Insurance
National Average: $1,200-$2,000/year ($100-$167/month)
High-Risk Areas: Expect $3,000-$5,000/year in hurricane zones (Florida, Louisiana) or wildfire areas (California)
Private Mortgage Insurance (PMI)
Required when down payment is less than 20%. Typically costs 0.5-1.5% of the loan amount annually.
- On a $315,000 loan: $131-$394/month
- Can be removed once you reach 20% equity (either through payments or home value appreciation)
- FHA loans: PMI (called MIP) lasts for the life of the loan if down payment is less than 10%
HOA Fees
Condos and planned communities charge monthly fees for shared amenities and maintenance:
- Typical Range: $200-$700/month
- High-End Buildings: Can exceed $1,000/month
- What's Covered: Landscaping, pool, gym, exterior maintenance, sometimes utilities
Maintenance & Repairs
Budget 1-2% of home value annually for upkeep. On a $350,000 home, that's $3,500-$7,000 per year.
Common expenses: HVAC service ($300-500/year), roof replacement ($8,000-15,000 every 20 years), appliances, plumbing, electrical repairs.
Smart Strategies to Save Money on Your Mortgage
1. Make Extra Principal Payments
Even small extra payments dramatically reduce interest. On a $280,000 loan at 6.5%:
- +$50/month: Pay off 2.5 years early, save $33,280
- +$100/month: Pay off 4.5 years early, save $61,450
- +$200/month: Pay off 7.5 years early, save $108,420
Pro tip: Make one extra payment per year by paying bi-weekly (26 half-payments = 13 full payments instead of 12). Saves ~$50,000 and 4 years on a typical 30-year mortgage.
2. Refinance When Rates Drop
Worth considering when:
- Rates drop 0.75% or more below your current rate
- Your credit score has improved significantly
- You want to switch from 30-year to 15-year term
Break-even calculation: If refinancing costs $4,000 in closing costs and saves you $150/month, you break even in 27 months. After that, it's pure savings.
3. Remove PMI as Soon as Possible
Once you reach 20% equity (either through payments or appreciation), request PMI removal:
- Contact your lender when balance reaches 80% of original value
- If home has appreciated, get an appraisal ($400-600) to prove 20% equity
- Lender must automatically cancel at 78% LTV
4. Shop Around for Better Rates
Get quotes from at least 3-5 lenders. Rates can vary by 0.25-0.5% between lenders for the same borrower.
On a $280,000 loan, 0.25% = $40/month or $14,400 over 30 years.
5. Improve Your Credit Before Applying
Simple actions that can boost your score 50-100 points:
- Pay down credit card balances below 30% utilization
- Dispute any errors on your credit report
- Don't apply for new credit in the 6 months before mortgage application
- Become an authorized user on someone else's excellent credit account
Should You Buy Mortgage Points?
Mortgage points (also called "discount points") let you pay an upfront fee to reduce your interest rate. Each point costs 1% of the loan amount and typically lowers your rate by 0.25%.
Points Analysis: Is It Worth It?
Example on a $280,000 loan:
Without Points
Interest Rate: 6.50%
Monthly Payment: $1,770
Total Interest: $357,600
Upfront Cost: $0
With 2 Points
Interest Rate: 6.00%
Monthly Payment: $1,679
Total Interest: $324,440
Upfront Cost: $5,600
Monthly Savings: $91
Break-Even Point: 5.1 years
Total Savings (30 years): $27,560
When Should You Buy Points?
- You plan to stay long-term: Points only make sense if you stay past the break-even point (typically 5-7 years)
- You have extra cash: Don't drain your emergency fund to buy points. You need reserves for closing costs, moving, and repairs.
- You can't deduct PMI: If you're paying PMI, that's often removable later. Points reduce your rate permanently.
- Rates are high: When rates are elevated (7%+), reducing them with points has more impact than when rates are low (3-4%).
Pro tip: Some sellers offer to pay points as a concession in negotiations. This can be a great deal if you're short on cash but want a lower rate.
Rent vs. Buy: 5-Year Cost Comparison
Not sure if you should rent or buy? Here's how the costs compare over 5 years for a $350,000 home vs. equivalent rental.
🏠 Buying
🔑 Renting
The Verdict
After 5 years, buying costs $6,500 more upfront but you own $95,000 in equity. Buying breaks even around year 2-3 in most markets when you factor in equity and appreciation.
Rent Makes More Sense If:
- You plan to move within 3 years
- You can't afford 10%+ down payment
- The local housing market is overheated (price-to-rent ratio over 20)
- Your job situation is unstable
- You want flexibility and minimal responsibility
Buying Makes More Sense If:
- You'll stay 5+ years in the same area
- You have stable income and emergency savings
- Rent prices are high relative to home prices (price-to-rent ratio under 15)
- You want to build equity and eventual ownership
- You want fixed housing costs (vs. rising rent)
💰 Quick Affordability Check
Use the 28/36 rule to see how much house you can realistically afford. Lenders prefer housing costs under 28% of gross income and total debt under 36%.
Note: This is a quick estimate. Your actual approval depends on credit score, employment history, and other debts. Most lenders use the 28/36 rule, but some offer up to 43% DTI for well-qualified borrowers.
Mortgage Types: Which Loan Is Right for You?
Not all mortgages are the same. Different loan types have different requirements, costs, and benefits. Here's how they compare:
| Feature | Conventional | FHA | VA | USDA |
|---|---|---|---|---|
| Min. Down Payment | 3-20% | 3.5% | 0% | 0% |
| Min. Credit Score | 620-640 | 580 | 580-620 | 640 |
| Mortgage Insurance | PMI if down < 20% | MIP (required) | Funding Fee | Guarantee Fee |
| Can Remove PMI? | Yes, at 20% equity | No (life of loan) | N/A | N/A |
| Loan Limits (2025) | $806,500 | $518,400 (varies) | $806,500 | No set limit |
| Property Requirements | Any | Must meet HUD standards | Must meet VA appraisal | Rural areas only |
| Eligibility | Anyone | Anyone | Military/Veterans | Income limits apply |
| Best For | Good credit, 20% down | Low credit, small down payment | Veterans, no down payment | Rural buyers, low income |
Which One Should You Choose?
- Choose Conventional if: You have good credit (700+) and can put down 20%. You'll get the best rates and avoid PMI entirely.
- Choose FHA if: Your credit score is below 620 or you can only afford 3.5% down. MIP is permanent but rates are competitive.
- Choose VA if: You're military/veteran. Zero down payment, no PMI, and often the best rates available. The funding fee (2.3%) can be rolled into the loan.
- Choose USDA if: You're buying in a rural area and meet income limits (typically under $103,500 for family of 4). Zero down payment required.
How to Use This Calculator
- Enter the home price: The total purchase price of the property
- Set your down payment: Either as a dollar amount or percentage - both fields update automatically
- Input the interest rate: Your lender will provide this based on your creditworthiness and market conditions
- Choose your loan term: 15, 20, or 30 years
- Add optional costs: Property tax, insurance, HOA fees, and PMI to see your complete monthly payment
- Click Calculate: See your monthly payment, total interest paid, and detailed amortization schedule
The chart shows you exactly how your money is split between principal and interest over the life of the loan. Click "View Detailed Year-by-Year Schedule" to see a complete breakdown.
⚠️ Mortgage Red Flags: What to Avoid
Not all mortgage products are created equal. Here are the warning signs and traps that can cost you thousands or put you at financial risk.
🚩 Adjustable Rate Mortgages (ARMs)
The Trap: Low teaser rate (e.g., 3.5%) for the first 5-7 years, then adjusts annually based on market rates.
The Risk: Rate could jump to 8%+, increasing your monthly payment by $600-1,000. If you can barely afford the teaser rate, you're in trouble when it adjusts.
When It Makes Sense: You're 100% certain you'll move or refinance within the fixed period, or you expect income to increase significantly.
🚩 Interest-Only Loans
The Trap: Pay only interest for 5-10 years. Lower monthly payments, but you build zero equity through payments.
The Risk: Payments balloon when principal repayment begins. If home doesn't appreciate, you have no equity cushion. Common before the 2008 crash.
When It Makes Sense: High-income earners expecting bonuses/windfalls, or investors planning to flip the property quickly.
🚩 Maxing Out Your Budget
The Trap: Bank approves you for $500K based on 43% debt-to-income ratio. You buy at the max, leaving no buffer.
The Risk: Job loss, medical emergency, or major repair could force foreclosure. You're one bad month away from missing payments.
Better Rule: Aim for 25% of take-home pay (not gross), leaving room for savings, retirement, and life.
🚩 No Money Down Deals
The Trap: "Buy a house with zero down!" programs that layer multiple loans or seller concessions to avoid down payment.
The Risk: You're underwater immediately if home value drops even 5%. Higher rates, higher PMI, and you're a prisoner to the property.
Exception: VA loans (legitimate 0% down for veterans) and USDA loans (for rural properties) are safe if you have stable income.
🚩 Balloon Payment Mortgages
The Trap: Low payments for 5-7 years, then entire remaining balance due in one lump sum.
The Risk: You're betting you can refinance when the balloon is due. If your credit tanks, rates spike, or home value drops, you're stuck and may face foreclosure.
When It Makes Sense: Commercial real estate investors or those with guaranteed liquidity events (business sale, inheritance).
🚩 Negative Amortization Loans
The Trap: Monthly payments don't even cover the interest. Unpaid interest gets added to your principal, so you owe more over time.
The Risk: Your loan balance grows instead of shrinks. After 5 years, you might owe $320K on a $300K loan. Essentially digging a deeper hole monthly.
When It Makes Sense: Never. This is a predatory product. Run away.
Protect Yourself: Red Flag Checklist
- ❌ If you can't explain the loan terms to a friend, don't sign
- ❌ If monthly payment is more than 28% of gross income, you're stretching
- ❌ If lender pushes ARM "because rates will drop," get a second opinion
- ❌ If closing costs seem higher than 3-5% of loan, question every line item
- ❌ If you're told to overstate income or assets, that's fraud
- ✅ Get quotes from at least 3 lenders to compare
- ✅ Read the Truth in Lending disclosure carefully before closing
- ✅ Have a real estate attorney review documents if buying in a non-attorney state
Common Questions
Sources & Methodology
Our mortgage calculator uses industry-standard formulas and data from authoritative sources to ensure accuracy:
🏦 Mortgage Formulas
Based on standard amortization equations used by the Federal Housing Finance Agency (FHFA) and Consumer Financial Protection Bureau (CFPB).
📊 Interest Rate Data
Credit score rate tiers sourced from Freddie Mac Primary Mortgage Market Survey and myFICO lending statistics (2025).
🏡 Property Tax Rates
State property tax averages from Tax Foundation's annual report and Census Bureau data (updated 2025).
📝 Loan Limits
Conforming loan limits from FHFA 2025 baseline ($806,500) and FHA loan limits by county from HUD.
✅ Verification Process
This calculator was reviewed by a Certified Financial Planner™ to ensure accuracy of formulas and real-world applicability. All calculations are performed client-side using JavaScript - no data is sent to servers. Last verified: November 2, 2025.
🔗 Learn More From Trusted Sources:
Disclaimer: This calculator provides estimates based on the inputs you provide. Actual mortgage payments may vary based on your lender's specific terms, additional fees, and other factors. For important financial decisions, consult with a licensed mortgage professional or financial advisor.