Case 1
- Property price
- 400000
- Deposit
- 80000
- Annual interest rate
- 6.5%
- Term in years
- 30
- Property tax per year
- 4800
- Home insurance per year
- 1800
2,572.62
Open with these valuesMortgage Payment Calculator
2,572.62
Result: 2,572.62This adds property tax and insurance to the loan payment, because that is what leaves your account each month. Mortgage insurance and any service charge are not in it — if your deposit is under twenty percent, expect a further monthly amount on top.
The numbers at a glance
Held fixed: Property price 400,000.00, Deposit 80,000.00, Annual interest rate 6.500 %, Term in years 30, Property tax per year 4,800.00.
| Home insurance per year | Result |
|---|---|
| 0.00 | 2,422.62 |
| 500.00 | 2,464.28 |
| 1,000.00 | 2,505.95 |
| 1,500.00 | 2,547.62 |
| 1,800.00Your value | 2,572.62 |
| 2,000.00 | 2,589.28 |
| 2,500.00 | 2,630.95 |
| 3,000.00 | 2,672.62 |
| 3,500.00 | 2,714.28 |
Worked examples
Case 2
- Property price
- 400000
- Deposit
- 80000
- Annual interest rate
- 6.5%
- Term in years
- 15
- Property tax per year
- 0
- Home insurance per year
- 0
2,787.54
Open with these valuesCase 3
- Property price
- 250000
- Deposit
- 0
- Annual interest rate
- 6%
- Term in years
- 30
- Property tax per year
- 0
- Home insurance per year
- 0
1,498.88
Open with these valuesHow it's calculated
payment = P · i / (1 − (1 + i)^−n) + (tax + ins.)/12
- StepEnter the property price and your deposit.
- StepAdd the rate and the term in years.
- StepEnter the yearly property tax and insurance, or leave them at zero.
- ResultRead the total; a deposit under twenty percent usually adds mortgage insurance.
What this number means
This calculator turns a property price, a deposit, a rate and a term into the monthly housing payment — and unlike a plain loan calculator it adds the two bills that ride along with almost every mortgage. Lenders call the combination PITI: principal, interest, taxes and insurance, and it is the figure affordability is actually judged on. There are two independent steps. The loan itself is a standard annuity on the price minus the deposit, an identical payment each month that covers the interest accrued since the last one and puts the remainder against the balance. Then the annual property tax and home insurance are each divided by twelve and added on, exactly as a lender does when collecting into escrow. On the default figures that second step is not small: 400 plus 150 a month, or 550 on top of a loan payment of 2,022.62, which is 27 percent more. The Consumer Financial Protection Bureau puts the usual range at 15 to 30 percent, which is why a payment quoted as principal and interest only is not a housing budget. Read the monthly figure for affordability and the lifetime figure for value: those 360 payments repay 728,142 on a 320,000 loan, meaning 408,142 in interest, more than the amount borrowed. Mortgage insurance, closing costs and association fees are deliberately excluded — budget for them on top.
PITI, not just the loan
Lenders judge affordability on principal, interest, taxes and insurance together. A payment quoted as principal and interest only is not a housing budget.
Three costs are deliberately missing
Mortgage insurance, closing costs and association fees are all excluded here. Budget for them on top of the figure shown.
Read both numbers, not one
The monthly figure answers whether you can carry it. The lifetime total answers what the house actually costs you.
Commonly misread
Interest is a small part of what I pay back.
On the default figures, 360 payments repay 728,142 on a loan of 320,000. That is 408,142 in interest — more than the amount borrowed.
Taxes and insurance round to nothing next to the loan payment.
On the default figures they add 27 percent. The Consumer Financial Protection Bureau puts the usual range at 15 to 30 percent.
A bigger deposit only changes the monthly payment.
It changes the loan the interest is charged on, so it moves the lifetime total by far more than it moves the monthly figure.
Questions
What is included in the payment shown?
Principal and interest on the loan, plus one twelfth of the yearly property tax and one twelfth of the yearly insurance. At 400000 with 80000 down at 6.5 % over thirty years that is 2022.62 plus 550.00, so 2572.62 a month.
What is not included?
Mortgage insurance, any homeowners association charge, and utilities. If the deposit is under twenty percent of the price, expect mortgage insurance as a further monthly amount on top.
How much does a shorter term save?
The same 320000 over fifteen years instead of thirty costs 2787.54 a month rather than 2022.62 — and 181757.84 in interest rather than 408142.36. The payment is 38 % higher; the interest is less than half.
Why is the deposit entered separately from the price?
Because the loan is the price minus the deposit, while tax and insurance follow the property value. Keeping them apart is what lets the deposit move the loan without moving the escrow part.
Do I enter the interest rate or the APR?
Enter the annual rate the lender quotes; the calculator divides it by twelve. An APR that already carries fees will produce a payment slightly above the one on the contract.
Sources and last check
Information, not financial advice.