What is included in a monthly mortgage payment?

A typical monthly mortgage payment includes four components known as PITI: Principal (the portion that reduces your loan balance), Interest (the cost of borrowing charged by the lender), Taxes (property taxes collected monthly and held in escrow), and Insurance (homeowner's insurance premium also held in escrow). Some borrowers also pay private mortgage insurance (PMI) if their down payment is less than 20%.

How much down payment do I need for a mortgage?

The traditional down payment is 20% of the home price, which allows you to avoid private mortgage insurance. However, many loan programs accept lower down payments: conventional loans may require as little as 3-5%, FHA loans require 3.5%, and VA or USDA loans may require 0% down. A larger down payment reduces your monthly payment and total interest paid over the life of the loan.

Should I choose a 15-year or 30-year mortgage?

A 30-year mortgage offers lower monthly payments, making it easier to qualify and freeing up cash for other goals. A 15-year mortgage has higher monthly payments but a lower interest rate, and you pay significantly less total interest over the life of the loan. Choose based on your monthly budget, financial goals, and how long you plan to stay in the home.

How does the interest rate affect my mortgage payment?

Even small changes in interest rate have a large impact over the life of a mortgage. For example, on a $300,000 30-year loan, a 1% rate increase (from 6% to 7%) adds roughly $200 per month to your payment and over $70,000 in total interest. Shopping around for the best rate and improving your credit score before applying can save you tens of thousands of dollars.

Mortgage Calculator

Estimate your monthly mortgage payment, total interest, and view a full amortization schedule.

Home Price ($)

Down Payment

Loan Term

Interest Rate (% p.a.)

Property Tax ($/mo)

Homeowner's Insurance ($/mo)

Monthly Payment (PITI)

Principal & Interest $0 Property Tax $0 Insurance $0

Total Interest

Total Cost

Amortization Schedule

Month	Payment	Principal	Interest	Balance

How Does a Mortgage Work?

A mortgage is a loan used to purchase real estate, where the property itself serves as collateral. In the United States, the most common mortgage terms are 15, 20, and 30 years with a fixed interest rate. Your monthly payment is typically made up of four components known as PITI: principal, interest, property taxes, and homeowner's insurance. Understanding each component helps you budget accurately and compare loan offers from different lenders.

The Mortgage Payment Formula

The principal and interest portion is calculated using the standard amortization formula: M = P × r × (1 + r)ⁿ / ((1 + r)ⁿ − 1), where P is the loan amount (home price minus down payment), r is the monthly interest rate (annual rate divided by 12), and n is the total number of monthly payments. Property tax and insurance are then added to arrive at the full monthly PITI payment.

Using This Calculator

Enter your home price, down payment amount or percentage, desired loan term, and the interest rate you have been quoted. You can also include monthly property tax and insurance costs for a complete picture of your housing expense. The calculator instantly shows your monthly payment with a PITI breakdown, total interest over the life of the loan, total cost, and a visual donut chart. The amortization schedule below reveals exactly how each payment is split between principal and interest month by month, helping you see how your equity builds over time.

Comparing different scenarios — such as a larger down payment, shorter term, or lower rate — can save you tens of thousands of dollars. Use the share button to bookmark or send a specific calculation, and print results to keep a record when meeting with your lender.

Formula

M = P × [r(1 + r)ⁿ] / [(1 + r)ⁿ − 1]

Where:

M = monthly mortgage payment
P = principal loan amount
r = monthly interest rate (annual rate ÷ 12)
n = total number of monthly payments (years × 12)

Example Calculation

Scenario: $300,000 home with 20% down payment, 6.5% interest rate, 30-year term

Step 1: Loan amount P = $300,000 − $60,000 down payment = $240,000
Step 2: Monthly rate r = 6.5% ÷ 12 = 0.005417
Step 3: Total payments n = 30 × 12 = 360
Step 4: M = $240,000 × [0.005417(1.005417)³⁶⁰] / [(1.005417)³⁶⁰ − 1]
Result: Monthly payment = $1,517.09 | Total interest paid = $306,152.40

This calculator is for informational purposes only and does not constitute financial, tax, or legal advice. Always consult a qualified professional for decisions specific to your situation.