moneyWhat this mortgage calculator does
It estimates the full monthly cost of a fixed-rate home loan, often called PITI: principal, interest, property taxes and homeowners insurance, plus private mortgage insurance (PMI) and HOA dues when they apply. It also shows total interest over the life of the loan and the month PMI is scheduled to stop.
How to use it
Enter the home price and your down payment as a percentage or a dollar amount, then the interest rate and a 15, 20 or 30-year term (or a custom term up to 50 years). Add your annual property tax and insurance estimates and any monthly HOA dues.
If you put down less than 20%, PMI is filled in automatically with a rough rate based on your loan-to-value ratio. Replace it with the rate from your lender’s Loan Estimate when you have one.
Assumptions
- Fixed interest rate, monthly payments, interest rounded to the cent each month. The payment is rounded to the nearest cent and the final payment absorbs the last few cents.
- PMI is an annual percentage of the original loan amount, charged monthly until the balance is scheduled to reach 78% of the purchase price, when federal law generally requires automatic cancellation for conventional loans. FHA mortgage insurance follows different rules.
- Property tax, insurance and HOA dues stay constant; in reality they usually rise. Closing costs, points and escrow cushions are not included.
Worked example
A $400,000 home with 10% down ($40,000) leaves a $360,000 loan. At 6.5% for 30 years, principal and interest are $2,275.44 a month. Adding $4,800 a year in property tax ($400.00/mo), $1,500 in insurance ($125.00/mo) and PMI at 0.5% ($150.00/mo) gives $2,950.44 a month. PMI ends after 109 payments, about 9 years in, after which the payment falls to $2,800.44. Total interest over 30 years is $459,164.
Frequently asked questions
What does PITI mean?
Principal, interest, taxes and insurance: the four parts of a typical mortgage payment when taxes and insurance are collected through an escrow account. PMI and HOA dues are added on top when they apply.
When does PMI go away?
On a conventional loan, PMI must be cancelled automatically once the balance is scheduled to reach 78% of the original home value, and you can usually ask to cancel at 80%. Extra principal payments can get you there sooner. This calculator uses the scheduled 78% date.
Is a 15-year mortgage better than a 30-year mortgage?
A 15-year loan has a higher monthly payment but usually a lower rate and far less total interest. A 30-year loan keeps the required payment lower. Compare both terms here, and make sure the payment fits your budget with room for savings.
Why is my lender’s payment different?
Lenders may use different rounding, escrow cushions, actual tax and insurance bills, mortgage insurance pricing and first-payment dates. Use this as an estimate and rely on your official Loan Estimate.