Quick answer: Your monthly mortgage payment is principal and interest, worked out with the annuity formula, plus property tax, home insurance, any HOA fees and PMI. A $300,000 home with 20% down at 6.5% for 30 years is a $240,000 loan with principal and interest of $1,516.96 a month, before tax and insurance.
The number a lender quotes for a mortgage is often only principal and interest. Your real monthly cost also includes property tax, home insurance, any homeowners association fees and, for smaller down payments, mortgage insurance. This calculator adds them together so you can judge affordability before you fall in love with a house.
Try changing one input at a time. A lower rate, a bigger down payment or a shorter term each changes the picture in a different way, and the payment breakdown bar shows where your money goes each month.
How the payment is worked out
Principal and interest use the standard amortization formula on the loan amount (home price minus down payment). Property tax and insurance are yearly amounts divided by 12.
P&I = Loan × r ÷ (1 − (1 + r)−n) (r = annual rate ÷ 12, n = months)
Total = P&I + tax ÷ 12 + insurance ÷ 12 + HOA + PMI
Private mortgage insurance is usually required on conventional loans when the down payment is under 20%. Typical yearly rates run from about 0.3% to 1.5% of the loan, depending on credit score and loan size. It normally ends once your balance reaches 80% of the home's original value, and the calculator estimates when that happens.
A worked example
Example. A $400,000 home with 20% down leaves a $320,000 loan. At 6.5% over 30 years, principal and interest come to $2,022.62 a month. Add property tax at 1.1% of the home price ($366.67 a month) and $1,500 a year of insurance ($125.00 a month), and the total is $2,514.28 a month. These rates are illustrations only. Use the ones from your own offer.
Real-world examples
30 years or 15 years? On a $240,000 loan at 6.5%, a 30-year term costs $1,516.96 a month and a 15-year term costs $2,090.66. Over the life of the loan the interest is $306,107 against $136,318. Rates on shorter terms are usually lower too, which widens the gap further. We use the same rate here to show the effect of the term alone.
The 20% rule. A larger down payment lowers the loan, the payment and the total interest, and on most conventional loans a down payment of at least 20% avoids PMI. Try changing the down payment field to see the payment fall.
Common mistakes to avoid
- Budgeting for principal and interest only. Property tax, insurance, HOA fees and PMI can add several hundred dollars to the monthly cost.
- Forgetting closing costs and moving costs, which are paid up front and are not part of the monthly payment.
- Assuming PMI lasts forever. On many conventional loans it can be removed once you have enough equity, so ask your lender how and when.
Go deeper: read our guide How Loan Payments Are Calculated, With Examples.
Frequently asked questions
How much should I put down?
Putting 20% down avoids PMI on most conventional loans and lowers your monthly payment, but many lenders accept less. A smaller down payment keeps more cash in hand and costs more each month and over the life of the loan.
What does the total monthly payment include?
Principal and interest, property tax, home insurance, HOA fees if you have them, and PMI if it applies. Utilities, maintenance and repairs are not included.
Is this only for the United States?
The maths works for any fixed-rate mortgage. The property tax, PMI and HOA fields follow US practice, so set them to 0 if they do not apply where you live. Pick your currency at the top of the form.
Are closing costs included?
No. Closing costs are one-time fees paid when you buy, so they are not part of the monthly payment. Budget for them separately. They are often quoted as roughly 2% to 5% of the loan amount.
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Sources and further reading
- Mortgage loan (Wikipedia)
- CFPB: Owning a Home tools and guides
- Annuity: the math behind loan payments (Wikipedia)
Formulas on this page are checked by automated tests against independent references. See how we test our tools.