What is Mortgage Payment Calculator: P&I, Taxes, and Insurance?
How it Works
Step-by-Step Guide
1. Determine Principal
Subtract your down payment from the home's purchase price to find the loan amount.
2. Input Interest Rate
Enter the annual percentage rate (APR) quoted by your lender (e.g., 6.5%).
3. Select Term
Choose the lifespan of the loan, typically 15 or 30 years.
4. Add Escrow
Include estimated annual property taxes and insurance costs for a realistic total.
Example
Input: $300,000 Loan, 6.5% Rate, 30 Years
Result: $1,896.20/month (P&I only)
FAQ
What is PMI and when do I pay it?
Private Mortgage Insurance (PMI) is usually required if your down payment is less than 20% of the home's value. It protects the lender, not you, and typically costs 0.5% to 1% of the loan amount annually.
How does the loan term affect interest?
A shorter term (e.g., 15 years) results in higher monthly payments but significantly lower total interest paid over the life of the loan compared to a 30-year term.
Are property taxes included in the mortgage payment?
Often, yes. Lenders collect 1/12th of your annual tax bill each month and place it in an escrow account to pay the government on your behalf.
Does this calculator assume a fixed rate?
Yes, this formula applies to Fixed-Rate Mortgages (FRM). Adjustable-Rate Mortgages (ARM) have rates that fluctuate after an initial fixed period.
How do extra payments help?
Any amount paid over the required monthly payment goes directly toward reducing the principal balance, which reduces future interest accrual and shortens the loan term.
Conclusion
Mastering your mortgage calculation empowers you to negotiate better terms and understand the true cost of homeownership. While a bank may approve you for a certain amount based on gross income, your personal budget should be dictated by this monthly figure relative to your net take-home pay. Ideally, your total housing costs should not exceed 28% of your gross monthly income.