About the Mortgage Calculator
The sticker price of a house is not what leaves your checking account every month. Your lender bills you for the loan itself, and usually also collects property taxes, homeowners insurance, possible HOA dues, and PMI whenever your down payment is below 20%. This calculator adds all of those layers together the way a monthly escrow statement would, so you can shop for homes using the number that actually hits your bank account.
Because housing decisions are usually momentary and one-way, it helps to preview several scenarios before making an offer: a bigger down payment may erase PMI, and shortening the term shifts more of each payment toward equity.
The formula behind it
The loan portion uses the standard amortization formula used by virtually every US lender:
M = P × r × (1+r)^n / ((1+r)^n − 1)M is the monthly principal-and-interest payment, P is the amount borrowed, r is the monthly rate (APR/12) and n is the number of monthly payments. Taxes and insurance are divided by 12 and stacked on top; HOA dues are monthly already. When the down payment is under 20%, private mortgage insurance is estimated at 0.5% of the loan balance per year — the typical range is 0.3%–1.5% depending on credit score and loan type.
Worked example
A quick, realistic run-through with the default inputs above:
- Home price $300,000 and down payment $60,000 (20%) → you borrow $240,000.
- On $240,000 at 6.5% for 30 years, the amortization formula produces about $1,516.94 per month.
- Property tax $3,600/yr adds $300; insurance $1,200/yr adds $100; HOA $0; PMI $0 because 20% down is the cutoff.
Takeaway: Total monthly cost ≈ $1,917 — roughly 117 extra dollars per month for every $100,000 of taxes and insurance charged annually at $7,200.
What moves the result
- Down payment size — besides shrinking the loan, 20% down removes PMI entirely.
- Loan term — moving from 30 to 15 years raises the payment every month but can cut lifetime interest by more than half.
- Local tax rates — property tax can swing the payment by hundreds of dollars across US counties.
- Insurance climate risk — coastal and wildfire-zone premiums have risen sharply in recent years.
- Interest rate (APR) — each 1% drop on a $240,000 loan saves roughly $150 per month.
Practical tips
- Ask sellers’ agents for the previous property-tax bill with the last 2 levies — it beats any website estimate for a specific home.
- Compare the APR, not the headline rate: APR folds lender fees into the rate, and closing-cost gaps between quotes are often invisible otherwise.
- Try the same house at 15 vs 30 years. If the 15-year payment is affordable, you keep flexibility by taking the 30-year and paying extra as you go, instead of being locked in.
- If you can only put 10% down, model PMI carefully in your budget — it disappears once you hit 20% equity, so leave a reminder to request removal in writing.
- Remember escrow shakes up at the first property-tax reassessment, so cheap first-year payments can grow in year 2.
Frequently asked questions
Does this calculator include escrow?
Yes. Property tax and insurance are added monthly exactly like a typical escrow arrangement; you simply pay one bundled payment.
How much PMI would I actually pay?
Between 0.3% and 1.5% of the loan amount each year, with 0.5% being a fair default. The calculator flips PMI on automatically whenever the down payment is below 20% and estimates it at 0.5%.
What is PITI?
Principal, Interest, Taxes and Insurance — the four components that make up the payment most lenders quote.