Mortgage Calculator
Estimate your monthly mortgage payment including principal, interest, taxes, insurance, and PMI.
Frequently Asked Questions
This calculator provides estimates for educational purposes only. Actual mortgage terms, rates, and costs may vary based on your credit score, lender, location, and market conditions. Consult a mortgage professional for personalized advice.
What PITI Means and Why It Matters
Your true monthly housing cost is not just your principal and interest payment — it's PITI: Principal, Interest, Taxes, and Insurance. Lenders use your PITI payment to qualify you for a mortgage, and you should use it to budget accurately for homeownership.
- Principal: The portion of each payment that reduces your outstanding loan balance. In the early years of a 30-year mortgage, principal makes up a small fraction of each payment. By the final years, it dominates.
- Interest: The cost of borrowing, calculated monthly as your interest rate ÷ 12 × remaining balance. Interest is highest in month 1 and declines with each payment as the balance shrinks.
- Taxes: Property taxes are collected monthly by your lender and held in escrow, then paid to the local government annually or semi-annually. Rates vary significantly by state and county — from under 0.3% in Hawaii to over 2% in New Jersey.
- Insurance: Homeowners insurance is also escrowed. PMI (Private Mortgage Insurance) is added if your down payment is less than 20% — it protects the lender, not you, and can be cancelled once you reach 20% equity.
15-Year vs 30-Year: The Real Cost Difference
The difference between a 15-year and 30-year mortgage on a $350,000 loan at 7% interest is striking:
| Metric | 30-Year | 15-Year |
|---|---|---|
| Monthly P&I | $2,329 | $3,144 |
| Total interest paid | $488,280 | $215,870 |
| Interest savings | — | $272,410 |
The 15-year payment is $815 higher per month — but you save over $272,000 in interest and own the home outright 15 years sooner. Whether that tradeoff is worthwhile depends on your other financial goals: if you have high-interest debt, a retirement gap, or no emergency fund, the extra cash flow from a 30-year mortgage may serve you better.
How Extra Payments Reduce Total Interest
You don't have to commit to a 15-year mortgage to accelerate payoff. Making extra principal payments on a 30-year mortgage can dramatically reduce total interest and shorten your loan term.
On that same $350,000 / 7% / 30-year loan, adding just $200/month in extra principal reduces total interest paid by roughly $89,000 and shortens the loan by about 6 years. Adding $500/month saves approximately $155,000 in interest and cuts about 10 years off the term.
The key is to designate extra payments specifically as "principal only" — most lenders offer this option. A payment applied to principal immediately reduces your balance and the interest calculated on it for every subsequent month.
How Much Mortgage Can You Afford?
Lenders generally use two debt-to-income (DTI) ratios to qualify borrowers:
- Front-end DTI: Your PITI payment should not exceed 28% of gross monthly income. On a $8,000/month income, that's $2,240 for housing.
- Back-end DTI: All monthly debt payments (housing + car loans + student loans + minimums) should stay under 43% of gross income. Some lenders go to 50% for strong borrowers.
These are qualification thresholds, not recommendations. Many financial planners suggest keeping your actual housing costs under 25% of take-home (after-tax) pay — a more conservative target that leaves room for maintenance, repairs, and other savings goals. Use the calculator to find the home price where your PITI stays within your personal comfort zone.
Related: Understanding Mortgage Amortization — Deep dive into how your payments split between principal and interest over time, with worked examples on extra payments and PMI removal.