How mortgage payments work
Most fixed-rate mortgages use an amortizing payment structure: you pay the same total amount every month for the life of the loan, but the mix of principal and interest shifts over time. This calculator computes that payment using the standard amortization formula and layers on the other recurring costs of homeownership — property taxes, homeowners insurance, PMI, and HOA dues — so you can see your true all-in monthly cost, not just principal & interest.
Principal, interest, taxes, and insurance (PITI)
Lenders often refer to your full housing payment as "PITI":
- Principal: The portion of your payment that reduces your loan balance.
- Interest: The cost of borrowing, calculated on your remaining balance.
- Taxes: Property taxes, usually collected monthly into an escrow account.
- Insurance: Homeowners insurance, also typically escrowed.
If your down payment is under 20%, most conventional loans also require PMI. Use our PMI Calculator to dig into that cost specifically, or our Property Tax Calculator to estimate taxes for your area.
A worked example
A $340,000 loan at 6.75% over 30 years runs about $2,205/month in principal & interest. Add $375/month in property taxes and $130/month in homeowners insurance — common figures for a home in that price range — and the full PITI payment lands around $2,710/month. If the down payment behind that loan was under 20%, PMI would add another $100–$300/month on top, which is exactly the kind of gap that catches buyers off guard when they've only budgeted for principal & interest.
15-year vs. 30-year, side by side
On that same $340,000 loan, a 15-year term at a typically lower rate (say 6.1%) runs about $2,890/month in principal & interest — roughly $685 more per month than the 30-year option — but pays off in half the time and cuts total interest paid by roughly $270,000 over the life of the loan. Neither term is universally better; it's a direct trade-off between monthly cash flow and total interest cost.
Related calculators
Already know your loan amount and want a pure payment breakdown? Try the Monthly Payment Calculator. Still figuring out your budget? Start with the Home Affordability Calculator.