What your mortgage result shows
The headline is the whole monthly payment, not just the loan. That distinction is where most first-time buyers are caught out: principal and interest are the figure lenders quote, while the money that actually leaves your account each month includes property tax, home insurance, any association dues and — below 20% equity — mortgage insurance.
The escrow and dues line makes that visible as a share. On a typical purchase it is a fifth to a quarter of the payment, it is not building any equity, and unlike the loan it rises over time as assessments and premiums do. A payment you can just afford today is a payment that gets harder.
The line no other calculator on this search gives you is PMI stops at payment N. Mortgage insurance is not a permanent cost: it falls away once the loan reaches 80% of the original price, and on a normal schedule that month is knowable in advance. It is worth a few hundred dollars a month and a dated milestone worth planning around.
How to use this mortgage calculator
- Price and down payment. The down payment is entered as a percentage because that is what determines whether mortgage insurance applies at all.
- Interest rate from your own quote if you have one. The prefilled figure is this week’s national average for a 30-year fixed, which is a starting point rather than your rate.
- Term. Compare 30 against 15 and look at the total interest, not the payment — the difference is usually the largest single number on this page.
- Property tax rate from your county, not a national guess. It ranges from well under 0.5% to over 2% of value depending on where you buy, which can swing the payment by hundreds of dollars.
- Insurance from a real quote where possible, and mortgage insurance at the rate your lender quotes — or zero if you are putting 20% down.
The four parts of a mortgage payment
Lenders call it PITI: principal, interest, taxes and insurance.
Principal repays the loan and builds your equity. Interest is the cost of borrowing, and on a 30-year loan it is the larger share of every payment for more than a decade — the amortization calculator shows the exact month that flips. Taxes go to your local government and are usually collected monthly by the lender into an escrow account, then paid on your behalf. Insurance means the homeowner policy your lender requires, also usually escrowed.
Two further items ride alongside without being part of PITI. Mortgage insurance protects the lender, not you, and applies while your equity is thin. HOA or condo dues are paid directly to the association and are not escrowed, but they are just as compulsory.
Only the first of those four builds anything you own. That is worth remembering when comparing a mortgage payment to rent: the honest comparison is rent against interest, tax, insurance and maintenance — not against the whole payment.
When mortgage insurance stops
On a conventional loan, private mortgage insurance is required while the loan exceeds 80% of the home’s value. Two rules matter, and they are not the same.
Under federal law your lender must cancel PMI automatically once the balance reaches 78% of the original value on the scheduled amortisation, provided payments are current. Separately, you may request cancellation at 80%, which arrives earlier — and the difference between waiting and asking is typically several months of premiums. The calculator uses the 80% point, because that is the earliest you can act.
Extra payments accelerate it, since the trigger is the balance rather than the calendar. Appreciation can too, but only with a new appraisal and the lender’s agreement, which is a request rather than a right. Either way it is a diary entry: the payment does not fall on its own until the 78% point, and nobody will remind you at 80%.
One important exception. Most FHA loans carry a mortgage insurance premium for the life of the loan if the down payment was under 10%, and the only way out is refinancing into a conventional loan. If that is your situation, this calculator’s drop-off date does not apply and refinancing later is part of the plan rather than an option — the refinance calculator is where to test it.
How much house you can actually afford
Lenders assess two ratios. The front-end ratio is your housing payment against gross income, traditionally around 28%. The back-end ratio is all your debt payments against gross income, commonly capped near 36% though many programmes stretch further. Being approved for a number is not the same as that number being wise.
Three costs sit outside the approval maths and inside your actual budget. Maintenance runs to a meaningful percentage of the home’s value every year, and it is lumpy — a roof does not fail in monthly instalments. Utilities on a larger home exceed those of an apartment. And transaction costs mean buying and selling within a few years frequently loses money even in a rising market.
The practical test is whether the payment leaves room to keep saving. A house that stops your retirement contributions is expensive in a way the payment does not show — see the affordability calculator for the income side and the 401(k) calculator for what those paused contributions would have become.
Fifteen years or thirty?
A 15-year loan carries a materially higher payment and costs far less overall — usually less than half the total interest, because you are borrowing on a fast-falling balance for half as long, and typically at a slightly lower rate too.
The case for 30 is flexibility. The lower required payment leaves room for retirement contributions, an emergency fund and the maintenance surprises above, and nothing stops you paying a 30-year loan down faster voluntarily. The case for 15 is that most people do not, and the shorter term enforces the discipline while guaranteeing the saving.
A middle path many buyers take: sign for 30 and pay it like a 20, which keeps the option to fall back in a bad year. Run both terms above and the trade is easy to see in the total-interest line.
What you pay at closing
The down payment is not the only cash needed on the day. Closing costs typically run 2–5% of the purchase price and fall into three groups.
Lender charges — origination or underwriting fees, and any discount points you choose to buy. Third-party costs — appraisal, title search, title insurance, survey, attorney and recording fees, most of which are set by the provider rather than the lender. Prepaids and escrow set-up — the first year of homeowner insurance, prepaid interest to the end of the month, and several months of property tax collected up front to seed the escrow account.
That last group surprises people because it is not a fee at all: it is money you would have paid anyway, just earlier. It still has to be available at closing.
Two documents govern all of it. The Loan Estimate arrives within three business days of your application and sets out every charge; the Closing Disclosure arrives at least three business days before completion and must match it within defined tolerances. Comparing the two is the single most effective thing a buyer can do, and lenders expect it. Seller concessions, where negotiated, can cover part of these costs and are worth asking about in a slower market.
Fixed or adjustable
A fixed-rate loan holds its rate for the whole term, which is what this calculator models. An adjustable-rate mortgage starts lower for an introductory period — commonly five, seven or ten years — and then resets periodically against an index plus a margin.
Whether that trade is sensible depends almost entirely on how long you will hold the loan and on what happens at the reset. Caps limit the damage: a typical structure limits the first adjustment, each subsequent one and the lifetime increase, and those three numbers are the ones to read rather than the headline rate. An adjustable loan with a five-year fixed period is a reasonable instrument for someone confident of moving inside five years, and a gamble for someone who is not.
Two asymmetries are worth naming. If rates fall you can refinance a fixed loan, so a fixed rate is not a bet against falling rates — it is insurance against rising ones. And the introductory saving on an ARM is usually modest relative to the uncertainty it buys, particularly when the fixed-rate spread is narrow.
How lenders set the rate you are offered
The national average this page prefills is a survey figure. Your own quote is built from it by adjustment, and the inputs are largely knowable in advance.
Credit score is the biggest single factor, and the differences are stepped rather than smooth — moving from one band to the next can change the rate materially, which is why pulling your own report and correcting errors before applying is worth more than negotiating afterwards. Loan-to-value matters next: a larger down payment reduces the lender’s risk and usually the rate with it. Loan type and size matter too, with conforming loans priced differently from jumbo, and government-backed programmes carrying their own rate and insurance structures.
Points let you buy the rate down by prepaying interest, which pays back only if you keep the loan long enough — the FAQ below sets out the break-even test. And because these adjustments differ between lenders, quotes genuinely differ: obtaining several within a short window counts as a single credit inquiry for scoring purposes, so shopping costs nothing.
One thing not to read into the average: it moves with the bond market rather than with the Federal Reserve directly. Mortgage rates track the 10-year Treasury yield far more closely than the federal funds rate, which is why they sometimes move before a Fed decision and sometimes against it.
What this calculator assumes
- A fixed rate for the whole term. An adjustable loan follows this schedule only until its first reset.
- Property tax and insurance held flat. Both rise in reality — assessments follow values and premiums have climbed sharply in exposed areas — so the later payments here are understated.
- PMI cancelled at the 80% point on the scheduled amortisation, which requires you to request it. It does not model FHA loans with life-of-loan premiums.
- No points, closing costs or fees, which typically add 2–5% of the price at purchase.
- No appreciation, so equity here comes only from repayment.
- No maintenance, utilities or moving costs, none of which appear in a lender’s figure either.
These are planning estimates rather than a quote. Your Loan Estimate and Closing Disclosure are the authorities on the payment, the escrow and every fee, and they are the documents to compare when you have more than one offer in front of you.
Mortgage questions people ask
Why is my payment higher than the mortgage calculator my lender showed me?
Most lender quotes show principal and interest only. Property tax, home insurance, mortgage insurance and any association dues are added on top, and together they commonly account for a fifth to a quarter of what actually leaves your account.
How do I get rid of PMI?
Request cancellation once the balance reaches 80% of the original price — the calculator dates that month for you. Your lender must cancel automatically at 78% if payments are current. Extra principal payments bring both dates forward, and most FHA loans with small down payments cannot cancel at all without refinancing.
Is a 20% down payment necessary?
No, and waiting for one has a cost of its own while prices and rents move. What 20% buys is no mortgage insurance, a smaller loan and usually a better rate. Below it, the calculator shows exactly what the insurance costs and when it ends, which makes the trade-off concrete.
Should I pay points to lower the rate?
It depends how long you keep the loan. Points are prepaid interest, so they pay back over time — work out the monthly saving, divide the cost by it, and compare that break-even in months against how long you realistically expect to stay before selling or refinancing.
Does making one extra payment a year really help?
Substantially, because every extra dollar goes to principal and stops accruing interest for the remaining term. One additional monthly payment a year typically removes several years from a 30-year loan — the mortgage payoff calculator prices it exactly.