Mortgage Calculator

A standard mortgage payment consists of four primary components known as PITI: Principal (paying down the loan balance), Interest (the lender's finance charge), Property Taxes (levied by your local municipal government), and Homeowners Insurance (hazard and casualty coverage). If your down payment is under 20%, Private Mortgage Insurance (PMI) is also added.

PMI protects the lender in case you default on your loan. Conventional lenders typically mandate PMI when your down payment is less than 20% of the home purchase price. Once your loan-to-value (LTV) ratio reaches 78-80%, you can request cancellation of PMI.

A 30-year fixed mortgage provides lower, more manageable monthly payments by spreading the principal over three decades, but costs substantially more total interest over time. A 15-year fixed mortgage requires higher monthly payments but typically features a lower interest rate and cuts total interest expense by 60% or more.

Property taxes are calculated as an annual percentage of your home's assessed value. Most mortgage servicers escrow this amount monthly (1/12th of the annual tax bill) along with your principal and interest to pay the local county or city on your behalf.

You can reduce monthly payments by: 1) Increasing your down payment to at least 20% to eliminate PMI and borrow less principal, 2) Shopping for competitive interest rates or purchasing mortgage points, 3) Choosing a longer loan term (such as 30 years instead of 15), and 4) Shopping around for lower homeowners insurance premiums.