Free Mortgage Calculator
Monthly payment, PMI, property tax, insurance, and a full amortization schedule — see the real cost of a home loan, updated as you type. PMI is factored in automatically whenever your down payment would be under 20% of the home price, since that's when most lenders require it. Add an extra monthly payment to see how much faster the loan pays off and how much interest that saves over the full schedule.
Estimates only, not financial advice. Confirm exact figures with your lender.
| Year | Principal paid | Interest paid | Remaining balance |
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Understanding your mortgage payment
A mortgage payment is really four separate costs bundled into one monthly bill, and only part of it goes toward actually owning the home. Understanding which part is which explains why two loans with the same interest rate can cost very different amounts, and why the balance drops so slowly in the early years.
A worked example. Take a $400,000 home with 20% down ($80,000), leaving a $320,000 loan at 6.5% over 30 years, with property tax at 1.1% and insurance at $1,400 a year:
Principal & interest — $2,022.62
Property tax — $366.67
Homeowners insurance — $116.67
PMI — $0 (not required at 20% down)
Total monthly payment — $2,505.95
Over the full 30 years, that loan costs about $408,142 in interest alone — more than the amount originally borrowed.
What makes up your monthly payment
Lenders call the full payment PITI, for principal, interest, taxes, and insurance:
- Principal is the part that reduces what you owe. It's the only portion that builds equity.
- Interest is the lender's charge for the money. It buys you nothing you keep.
- Taxes are your property taxes, usually collected monthly into an escrow account and paid out on your behalf when the bill comes due.
- Insurance is homeowners coverage, also typically escrowed. If your down payment is under 20%, private mortgage insurance (PMI) is usually added here as well.
HOA dues aren't part of PITI and aren't paid to your lender, but they're a real recurring cost of owning the home, so this calculator includes them in the monthly total if you enter them.
Why your early payments barely touch the balance
Interest is charged on whatever you currently owe, so when the balance is at its highest the interest is too. In the example above, the very first payment of $2,022.62 splits roughly $1,733 to interest and only about $289 to principal — meaning about 86% of that first payment does nothing to reduce the debt.
That ratio shifts gradually. Each dollar of principal you pay slightly lowers next month's interest, which leaves slightly more for principal the month after. The effect compounds slowly at first and then accelerates, which is why the amortization schedule on this page looks lopsided early and steep near the end.
How extra payments change the math
Because interest is charged on the remaining balance, anything extra you put toward principal removes not just that dollar but all the future interest it would have accrued. This is why extra payments have an outsized effect relative to their size.
In the same example, adding $200 a month toward principal pays the loan off in about 23.4 years instead of 30 — roughly 6.6 years early — and reduces total interest from about $408,142 to about $302,714. That's approximately $105,429 saved from payments totaling $56,200 in extra principal.
The earlier those extra payments happen, the more they're worth, since they have more future interest left to cancel. Before committing to this, it's worth confirming your lender applies extra payments to principal rather than simply advancing your next due date, and checking whether the loan carries any prepayment penalty.
How your down payment changes things
A larger down payment reduces your payment twice over: you borrow less, and once you reach 20% you generally avoid PMI entirely. Dropping the example to 10% down raises the loan to $360,000, which lifts principal and interest to about $2,275 and adds roughly $150 a month in PMI — around $400 more per month than the 20%-down version of the same house.
PMI isn't permanent. It protects the lender rather than you, and it can usually be cancelled once you've built enough equity, either by paying down the balance or through appreciation. The specific rules vary by loan type, so ask your lender what applies to yours.
Common mistakes when estimating a mortgage payment
- Budgeting from principal and interest alone. Taxes and insurance can add several hundred dollars a month. In the example above they're about $483 of the $2,506 total.
- Using a national average tax rate. Property tax varies enormously between states and even between neighboring towns. Look up the actual rate for the specific address.
- Assuming the escrow portion is fixed. Tax assessments and insurance premiums change over time, so a payment that includes escrow will drift even on a fixed-rate loan.
- Forgetting closing costs and reserves. The down payment isn't the only cash needed at signing.
- Stretching to the maximum approval amount. What a lender will approve and what leaves room in your budget are different questions.
What this calculator doesn't include
This is a payment estimator, not a loan quote. It doesn't account for closing costs, origination fees, discount points, mortgage interest deductions, or the ongoing maintenance and repair costs of owning a home — a frequently cited planning figure is roughly 1% of the home's value per year, though actual costs vary widely by age and condition.
It also assumes a fixed rate for the entire term. If you're considering an adjustable-rate mortgage, the payment shown here only reflects the initial period, and your rate could change afterward. For an accurate figure specific to your situation, request a Loan Estimate from a lender — that document is standardized, which makes offers directly comparable.
Frequently Asked Questions
How is my monthly mortgage payment calculated?
Principal and interest use the standard amortization formula: M = P × r(1+r)ⁿ ÷ ((1+r)ⁿ − 1), where P is your loan amount, r the monthly interest rate (APR ÷ 12), and n the number of monthly payments. Property tax, home insurance, PMI, and HOA dues are added on top to estimate your full monthly payment.
What is PMI and when do I have to pay it?
Private Mortgage Insurance protects the lender, not you, and typically applies when your down payment is below 20% of the home price. It's usually charged as a percentage of the loan balance per year, split into your monthly payment, and can often be cancelled once you reach 20% equity.
Does this include property tax and homeowners insurance?
Yes — enter your property tax rate and annual insurance premium and this calculator adds them to principal and interest for a full PITI (principal, interest, taxes, insurance) estimate, plus PMI and HOA dues if you enter them.
How much can extra payments actually save me?
Extra principal payments reduce your balance faster, which cuts the interest that accrues every month after. Enter an extra monthly amount to see the reduced payoff time and total interest saved compared to the standard schedule.
Is this exact enough to use for a loan application?
No — this is an estimate for planning purposes only, not financial advice. Actual lender quotes vary with closing costs, exact tax assessments, insurance shopping, and underwriting terms. Always confirm final numbers with your lender before committing.