How your mortgage payment is calculated
Your monthly mortgage payment has two parts. The principal & interest (P&I) portion is fixed for the life of a fixed-rate loan and is calculated with the standard amortization formula: Payment = L · r / (1 − (1 + r)⁻ⁿ), where L 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 (loan term in years times 12).
Many U.S. lenders also collect property tax and homeowners insurance in the same monthly bill, holding the money in an escrow account and paying the bills on your behalf — together with P&I this is often called PITI (Principal, Interest, Taxes, Insurance). If your down payment is below 20% of the home price, lenders typically also require PMI (Private Mortgage Insurance) until you build enough equity. This calculator includes all of these so the "Total monthly payment" reflects what you're likely to actually pay each month, not just P&I.
Two factors move the result the most: the loan term (a longer term lowers the monthly payment but increases total interest paid) and the interest rate your lender offers. A bigger down payment reduces the loan amount — which lowers both the monthly payment and, once it crosses 20%, removes PMI entirely. Our guide to reading an amortization schedule shows how each payment splits between interest and principal over time.
How the loan term changes your payment
For a $320,000 loan at 6.75%, here's how the principal and interest payment and the total interest change with the term:
Choosing 15 years instead of 30 raises the payment by about $756 a month but cuts total interest by more than $237,000. If the higher payment is too tight, a 30-year loan with voluntary extra payments can capture part of the savings while keeping flexibility — we compare the options in 15-year vs 30-year mortgage.
Frequently asked questions
How much of my income should go to my mortgage payment?
A common guideline is the 28/36 rule: keep your total housing payment at or below 28% of your gross monthly income, and all debt payments combined at or below 36%. On a $100,000 salary, that's a housing payment of about $2,333 a month. See how much house can I afford for a table by income.
How much do I need for a down payment?
Less than you might think: conventional loans start at 3% down for qualifying buyers, FHA loans at 3.5%, and VA and USDA loans can require nothing down. Putting down 20% avoids PMI on a conventional loan. Budget separately for closing costs, typically 2% to 5% of the loan amount.
What's included in my monthly mortgage payment?
Principal and interest, plus — when your lender uses an escrow account — property taxes and homeowners insurance (PITI). PMI and HOA dues may apply too. Our calculator includes all of them. Learn how the escrow account works and why it can change your payment.
Should I enter the interest rate or the APR?
Enter the interest rate — it's what determines your monthly payment. The APR adds lender fees and points and is meant for comparing offers. The difference is explained in APR vs interest rate.
When does PMI go away?
On most conventional loans you can ask to cancel PMI once your balance reaches 80% of the home's original value, and it ends automatically at 78%. Details and an example are in our PMI guide.
Can I use this calculator for an adjustable-rate mortgage?
Yes, for the initial fixed period: enter the ARM's starting rate. To see the risk, run the calculator again with the rate the loan could reach after its caps. Our fixed vs ARM guide walks through an example.
Is the information I enter saved anywhere?
No. All calculations run in your browser and nothing you enter is sent to a server. Reloading the page clears your numbers.
Note: this calculator gives an estimate based on the standard amortization formula and typical U.S. cost assumptions. It does not account for closing costs, HOA special assessments, rate changes on adjustable-rate loans, or the exact tax and insurance figures for your specific property. It is not financial advice — always confirm exact numbers with your lender before making a decision.