Buying a home
Mortgage Calculator
Built and maintained by Chandranshu Kumar · Figures from the IRS, SSA, BLS and Freddie Mac
The payment is more than the loan
Most mortgage calculators quote only principal and interest, then buyers are surprised at closing. The real monthly cost, often called PITI, adds property tax and home insurance, and PMI too if you put down less than 20%. Those extras can add several hundred dollars a month. Property tax alone varies a lot by area, so treat the tax and insurance figures here as starting points and replace them with real quotes for your home.
Estimates use about 1.1% of the price for property tax, $1,500 a year for insurance, and 0.6% of the loan for PMI. Adjust for your own numbers. Not financial advice.
How the monthly payment is worked out
The loan is the price minus your down payment. On a $400,000 home with 20% down that is a $320,000 loan. The principal and interest come from the standard amortization formula, which spreads that balance across every month of the term at the set rate so the payment stays level for the whole loan. Here it works out to $2,023 a month for principal and interest.
Inside each payment the split shifts over time. Early on most of the money goes to interest because the balance is large, and only a little chips at the principal. As the balance falls the interest shrinks and more of that same payment goes to principal, which is why a long loan builds equity slowly at first and faster later.
The full monthly cost, often called PITI, adds the parts a loan-only figure leaves out: property tax of about $367 a month, home insurance near $125, and PMI when the down payment is under 20%. Added together the real payment is $2,514, not the $2,023 the loan alone suggests. See the full method.
Common questions
What is the payment on a $400,000 mortgage?
At 6.5% over 30 years with 20% down, principal and interest are about $2,023. With tax and insurance the real payment is closer to $2,514.
What is PMI?
Private mortgage insurance, usually required when you put down less than 20%. It is dropped once you build enough equity, and runs roughly 0.5% to 1% of the loan a year.
Why is so much of an early payment interest?
Interest each month is charged on the balance you still owe, and at the start that balance is nearly the whole loan. The level payment covers that interest first and puts what is left toward principal, so the principal share is small early and grows every month as the balance comes down.
How big a payment can I afford?
Most budgets keep the full housing payment near 28% of gross income. To work backward from your income to a comfortable price, use the home affordability calculator, which applies that guideline and sets aside room for tax and insurance.