How the calculation works
The principal-and-interest payment is fixed for the life of a fixed-rate loan and follows a standard amortization schedule. Early payments are mostly interest; later payments are mostly principal. Property taxes (a percentage of assessed value) and homeowners insurance are added to produce your true monthly cost, known as PITI. Understanding how even a small rate change moves this number is the single most valuable skill a borrower can build.
Frequently asked questions
How is my monthly mortgage payment calculated?
The principal and interest portion uses the standard amortization formula: M = P · r(1+r)^n / ((1+r)^n − 1), where P is the loan amount, r is the monthly interest rate (annual rate ÷ 12), and n is the number of payments (years × 12). Property taxes and homeowners insurance are added on top to give your total PITI.
What is PITI?
PITI stands for Principal, Interest, Taxes, and Insurance — the four components of a typical monthly mortgage payment. Lenders use your full PITI, not just principal and interest, when judging affordability against your income.
Does this calculator include PMI?
This tool estimates principal, interest, property tax, and homeowners insurance. If your down payment is under 20% on a conventional loan, you'll usually also pay private mortgage insurance (PMI), which can add roughly 0.3%–1.5% of the loan amount per year. Add that separately when budgeting.
Why is my payment higher than the principal-and-interest number?
Because taxes and insurance are real monthly costs. A payment quoted as 'principal and interest only' can understate your true monthly obligation by hundreds of dollars. Always budget on full PITI.