What goes into a mortgage payment
Lenders often describe a monthly house payment as PITI:
- Principal: the part that pays down what you borrowed.
- Interest: what the lender charges for the loan.
- Taxes: property tax, often collected monthly by the lender and paid for you once or twice a year.
- Insurance: homeowners insurance, and sometimes mortgage insurance (PMI) if your down payment is under 20%.
Condo and some neighborhood owners also pay HOA (homeowners association) fees. These usually aren't paid through the lender, but they're part of what owning the home costs you each month, so the calculator adds them in.
The mortgage payment formula
Principal and interest use the standard amortization formula, the same one used for any fixed-rate loan:
M = P × r × (1 + r)n ÷ ((1 + r)n − 1)
- P is the loan amount: home price minus down payment.
- r is the monthly interest rate: yearly rate ÷ 12 ÷ 100.
- n is the number of monthly payments: years × 12.
Then the monthly share of property tax and insurance (each yearly amount ÷ 12) and any monthly HOA fee are added on top.
Worked example
A 350,000 home with 20% down means a loan of 280,000.
At 6.5% for 30 years: r = 6.5 ÷ 12 ÷ 100 = 0.0054167 and n = 360.
Principal and interest = 1,769.79 a month.
Property tax 4,200 ÷ 12 = 350, insurance 1,500 ÷ 12 = 125. Total monthly payment: 2,244.79.
Over 30 years you'd pay about 357,125 in interest, more than the amount borrowed.
15-year vs 30-year mortgage
A shorter loan has a higher payment but costs far less overall. The same 280,000 loan:
| Loan | Monthly principal & interest | Total interest |
|---|---|---|
| 30 years at 6.5% | 1,769.79 | 357,124.57 |
| 15 years at 6.5% | 2,439.10 | 159,038.11 |
| 30 years at 5.5% | 1,589.81 | 292,331.31 |
| 30 years at 7.5% | 1,957.80 | 424,808.22 |
In practice, 15-year loans usually also come with a lower rate than 30-year loans, which widens the gap further. Each percentage point of interest on a 30-year loan changes the payment by roughly 180 a month here.
How much house can you afford?
A common rule of thumb is the 28/36 rule: keep your housing payment (PITI) under 28% of your gross monthly income, and all debt payments together under 36%. With the 2,245 payment above, that suggests a gross income of about 8,000 a month (96,000 a year). Lenders set their own limits, so treat this as a starting point.
Good to know: this is an estimate for a fixed-rate loan. It doesn't include PMI, closing costs, or changes to tax and insurance over time. Adjustable-rate mortgages change after the fixed period. Ask lenders for a Loan Estimate to compare real offers.
Frequently asked questions
What is PMI and when do I pay it?
Private mortgage insurance protects the lender if you stop paying. Conventional lenders in the US usually require it when you put down less than 20%. It typically costs about 0.3% to 1.5% of the loan a year and can often be removed once you reach 20% equity.
Does a bigger down payment lower my payment?
Yes. You borrow less, so both principal and interest drop. Reaching 20% down also usually avoids PMI, which lowers the payment again.
Where do I find my property tax amount?
Home listings often show the last year's property tax. You can also check your county or city tax office, or estimate it with your area's tax rate times the home's assessed value.
Can I use this outside the US?
Yes. The math works in any currency. In countries where property tax or insurance aren't paid monthly, set those fields to 0 to see just the loan repayment.
Last reviewed November 2026.