Understanding your mortgage payment
A mortgage payment is rarely just "principal and interest." Lenders often bundle in a portion of your annual property taxes and homeowners insurance, collected monthly and held in an escrow account until the bills are due. This gives you one predictable monthly figure rather than large annual bills.
If your down payment is less than 20% of the home's price, lenders typically require Private Mortgage Insurance (PMI) — an extra monthly cost that protects the lender, not you, until you build enough equity.
How to use this calculator
Enter the home price and your planned down payment, the interest rate and loan term, and optionally your estimated annual property tax and insurance. The calculator estimates PMI automatically if your down payment is below 20%, using a typical rate of 0.5% of the loan amount per year.
Frequently asked questions
What's included in a monthly mortgage payment?
A full monthly mortgage payment typically includes principal and interest on the loan, plus a proportional share of annual property taxes and homeowners insurance, often referred to together as PITI. Private mortgage insurance (PMI) may also be included if your down payment is below a certain threshold.
What is PMI and when do I need it?
Private Mortgage Insurance (PMI) is typically required when a down payment is less than 20% of the home's value. It protects the lender if the borrower defaults and is usually added to the monthly payment until enough equity is built.
How does the down payment affect my monthly payment?
A larger down payment reduces the loan amount, which lowers both the principal and interest portion of your monthly payment and may also eliminate the need for PMI if it brings your equity above 20%.
Why does my estimate differ from my lender's quote?
Lenders factor in your specific credit profile, local tax rates, insurance quotes, and loan program details, which can shift the figures. This calculator provides a general estimate based on the inputs you provide.