How is a mortgage payment calculated?

A mortgage payment is calculated using the amortization formula that considers the loan amount, interest rate, and loan term. The formula produces equal monthly payments that cover both principal and interest over the life of the loan.

What is PMI and when is it required?

Private Mortgage Insurance (PMI) is typically required when your down payment is less than 20% of the home purchase price. It protects the lender in case of default and typically costs 0.3% to 1.5% of the loan amount annually.

How do extra payments save money?

Extra payments go directly toward reducing your principal balance, which means less interest accrues over time. Even small extra payments can save thousands in interest and shorten your loan term significantly.

What is included in a mortgage payment?

A typical mortgage payment includes Principal (loan repayment), Interest (cost of borrowing), Property Taxes, Homeowner's Insurance, and possibly PMI. This is often abbreviated as PITI.

Should I choose a 15-year or 30-year mortgage?

A 15-year mortgage has higher monthly payments but significantly lower total interest. A 30-year mortgage has lower monthly payments but costs more overall. Your choice depends on your budget and financial goals.

How is a mortgage payment calculated?

A mortgage payment is calculated using the amortization formula that considers the loan amount, interest rate, and loan term. The formula produces equal monthly payments that cover both principal and interest over the life of the loan.

What is PMI and when is it required?

Private Mortgage Insurance (PMI) is typically required when your down payment is less than 20% of the home purchase price. It protects the lender in case of default and typically costs 0.3% to 1.5% of the loan amount annually.

How do extra payments save money?

Extra payments go directly toward reducing your principal balance, which means less interest accrues over time. Even small extra payments can save thousands in interest and shorten your loan term significantly.

What is included in a mortgage payment?

A typical mortgage payment includes Principal (loan repayment), Interest (cost of borrowing), Property Taxes, Homeowner's Insurance, and possibly PMI. This is often abbreviated as PITI.

Should I choose a 15-year or 30-year mortgage?

A 15-year mortgage has higher monthly payments but significantly lower total interest. A 30-year mortgage has lower monthly payments but costs more overall. Your choice depends on your budget and financial goals.

Educational Tool — Estimates for educational purposes only. Not financial advice.Disclaimer

Warning

With less than 5% down payment, you'll face higher interest rates, larger PMI premiums, and limited lender options. Many programs require at least 3-3.5% down.

Understanding your monthly mortgage payment is the first step in homeownership. Our mortgage payment calculator breaks down your payment into principal, interest, property taxes, homeowner's insurance, and private mortgage insurance (PMI) so you can budget accurately.

Mortgage Payment Calculator

Calculate your monthly mortgage payment including principal, interest, taxes, insurance, and PMI.

February 2026 (current rate data)

Loan Amount

Down Payment

Interest Rate

Loan Term

Annual Property Tax

Annual Home Insurance

PMI Rate

Applied if down payment is less than 20%

Extra Monthly Payment

Additional principal payment per month

How the Mortgage Payment Calculator Works

A mortgage payment calculator estimates your monthly payment on a home loan, including principal, interest, property taxes, homeowner's insurance, and private mortgage insurance (PMI). Understanding your full monthly housing cost is essential for budgeting and comparing loan offers.

Enter your home price or loan amount, interest rate, loan term, down payment, and optional costs like property tax and insurance. The calculator uses the standard fixed-rate amortization formula to compute your monthly principal and interest payment, then adds escrow items for the total monthly cost. If your down payment is less than 20%, PMI is automatically included.

The Formula

M = P × [r(1+r)^n] / [(1+r)^n − 1]

Where M = monthly P&I payment, P = principal loan amount, r = monthly interest rate (annual rate ÷ 12), n = total number of payments (years × 12).

Source: Consumer Financial Protection Bureau ↗

Example Calculation

You're buying a $350,000 home with 10% down ($35,000) at 6.5% interest for 30 years:

Loan amount: $350,000 − $35,000 = $315,000
Monthly rate: 6.5% ÷ 12 = 0.5417%
Number of payments: 30 × 12 = 360
Monthly P&I: $315,000 × [0.005417(1.005417)^360] / [(1.005417)^360 − 1] = $1,991.01
Add property tax ($292/mo), insurance ($125/mo), PMI ($197/mo)

Total monthly payment: approximately $2,605/month. Total interest over 30 years: $401,764.

Tips for Better Results

✓

Compare 15-year vs 30-year terms

A 15-year mortgage has higher payments but saves over $150,000 in interest on a $315,000 loan.

✓

Include all costs in your budget

Your mortgage payment is not just P&I — property tax, insurance, HOA, and maintenance add 30-50% to the base payment.

✓

Check your debt-to-income ratio

Most lenders prefer total housing costs below 28% of gross monthly income (the CFPB's 28/36 rule).

✓

Consider extra payments

Even $100/month extra toward principal can save tens of thousands in interest and shorten your loan by several years.

Frequently Asked Questions

What interest rate should I use?

Use the rate from your pre-approval letter or current average rates from Freddie Mac's Primary Mortgage Market Survey. As of early 2026, 30-year fixed rates average around 6.5%.

Is PMI included automatically?

Yes. If your down payment is less than 20% of the home price, the calculator adds PMI at the rate you specify (default 0.5%). PMI is removed once you reach 20% equity.

Does this calculator handle adjustable-rate mortgages?

This calculator models fixed-rate mortgages only. For ARMs, the payment would change when the rate adjusts. We recommend using the fixed-rate calculator for the initial period of an ARM.

How accurate is this estimate?

The formula is the industry-standard amortization calculation used by lenders. Actual offers may differ based on your credit score, debt-to-income ratio, and lender fees.

Related Calculators

Mortgage Amortization →Refinance Calculator →Home Affordability →Rent vs. Buy →

Disclaimer: This calculator provides estimates for educational and informational purposes only. It does not constitute financial, tax, or legal advice. Results depend on user-provided inputs and the stated assumptions. Mortgage rates, fees, and terms vary by lender and market. This does not include closing costs, origination fees, or discount points. Always consult qualified professionals before making significant financial decisions.

Last updated: February 2026

Your Results

Total Monthly Payment

$2,421.20

Principal & Interest

158 years

Total Cost of Loan

$871,633.47

Total Interest Paid

$382,633.47

Payoff Time

30 years

Property Tax

25 years

Insurance

8 yr 4 mo

PMI

10 yr 5 mo

Interest Saved (Extra Payments)

$0.00

Visualization

Wally's Analysis

AI-powered interpretation of your results

AI Summary

Key Insights

Optimization

What-If Scenarios

Structured Analysis

Meaning • Impact • Risk • Alternatives • Sensitivity

meaning

Housing Cost Burden

Your estimated monthly payment is $2,421.204. This includes principal, interest, taxes, insurance, and PMI if applicable.

alternative

15-Year Term Alternative

A 15-year fixed mortgage typically carries 0.5-0.75% lower rates and saves 50-60% in total interest, though monthly payments increase ~40%. Use scenario comparison to model both.

Structured analysis generated algorithmically. Not financial advice.

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Refinance Options →Mortgage Pre-Approval →

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AI Disclosure

Wally's Analysis uses GPT-4o-mini for educational interpretations. AI responses are not personalized financial advice and may be inaccurate. All core calculations are deterministic — AI only interprets results.AI Transparency →

Accuracy Commitment

Industry-standard formulas vetted against IRS, SSA, BLS, CFPB. Client-side calculations. Regularly updated.

This calculator provides estimates for informational purposes only and does not constitute financial, tax, or legal advice. Consult a licensed professional before making financial decisions.

Updated: February 2026 (current rate data) · Methodology

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Mortgage Payment Calculator

How the Mortgage Payment Calculator Works

The Formula

Example Calculation

Tips for Better Results

Compare 15-year vs 30-year terms

Include all costs in your budget

Check your debt-to-income ratio

Consider extra payments

Frequently Asked Questions

What interest rate should I use?

Is PMI included automatically?

Does this calculator handle adjustable-rate mortgages?

How accurate is this estimate?

Related Calculators

Your Results

Visualization

Wally's Analysis

Structured Analysis

Housing Cost Burden

15-Year Term Alternative

Compare Mortgage Rates

Formula & Methodology

AI Disclosure

Accuracy Commitment

Frequently Asked Questions

Related Calculators

Amortization

Refinance

Affordability

Loan Payment

Trust & Transparency

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