Mortgage Calculator — Monthly Payment, Affordability and Refinance
Our free mortgage calculator goes beyond the basic payment formula to give you the complete picture of homeownership costs. Calculate your full monthly payment including property taxes, insurance, HOA, and PMI. Check how much house you can afford based on your income. Model extra payments to see how much interest you can save. Compare your current mortgage against a refinance option.
This calculator provides estimates for educational purposes only. Mortgage products, rates, and qualification requirements vary by lender. Consult a licensed mortgage professional for specific advice.
Understanding Your Mortgage Payment (PITI)
A mortgage payment is more than just principal and interest. The full monthly payment is often called PITI:
| Component | What It Is | Typical Amount | Goes To |
|---|---|---|---|
| Principal | Portion paying down your loan balance | Increases over time | Your equity |
| Interest | Cost of borrowing the money | Decreases over time | The lender |
| Property Tax | Annual tax assessed by local government | 1–2.5% of home value ÷ 12 | Local government |
| Homeowners Insurance | Protects against fire, theft, liability | $100–200/month typical | Insurance company |
| PMI | Protects lender if under 20% down | 0.5–1.5% of loan ÷ 12 | Insurance company |
| HOA Fees | Fees for community amenities | $0–$1,000+/month | Homeowners association |
Down Payment Guide
| Down Payment | Loan Type | PMI Required? | Pros | Cons |
|---|---|---|---|---|
| 3% | Conventional (Fannie/Freddie) | Yes | Low barrier to entry | PMI adds cost, less equity |
| 3.5% | FHA Loan | Yes (MIP — different rules) | Lower credit score OK | MIP for life of loan if under 10% down |
| 5% | Conventional | Yes | Common first-time buyer option | PMI until 20% equity |
| 10% | Conventional | Yes | Lower loan amount, better rate | PMI until 20% equity |
| 20% | Conventional | No | No PMI, best rates | Large upfront cost |
| 20%+ | Any | No | Best terms, lower payments | Large cash requirement |
15-Year vs 30-Year Mortgage Comparison
On a $400,000 home with 20% down ($320,000 loan):
| Metric | 30-Year (6.5%) | 15-Year (6.0%) | Difference |
|---|---|---|---|
| Monthly P&I | $2,023 | $2,703 | +$680/mo (15yr) |
| Total Payments | $728,291 | $486,486 | 15yr saves $241,805 |
| Total Interest | $408,291 | $166,486 | 15yr saves $241,805 |
| Payoff | 30 years | 15 years | 15 years sooner |
| Rate (typical) | 6.5% | 6.0% | 15yr usually lower |
| Equity at year 5 | ~$26,000 | ~$76,000 | 15yr builds 3× faster |
| Break-even point | — | ~10 yrs | If you sell before 10yr, 30yr may be better |
How Property Taxes Work
Property tax rates (called millage rates) vary enormously by location. They are typically expressed as a percentage of assessed value or as "mills" (dollars per $1,000 of value).
| State | Average Effective Rate | Annual Tax on $400K Home |
|---|---|---|
| New Jersey | 2.23% | $8,920 |
| Illinois | 2.05% | $8,200 |
| Texas | 1.60% | $6,400 |
| New York | 1.40% | $5,600 |
| California | 0.76% | $3,040 |
| Florida | 0.80% | $3,200 |
| Colorado | 0.51% | $2,040 |
| Alabama | 0.41% | $1,640 |
| Hawaii | 0.31% | $1,240 |
| Washington DC | 0.57% | $2,280 |
Rates are approximate and vary by county within states.
PMI: What It Is and How to Avoid It
Private Mortgage Insurance (PMI) is required when you put less than 20% down on a conventional loan. Here is what you need to know:
- Cost: Typically 0.5–1.5% of the original loan amount per year, paid monthly. On a $320,000 loan, that is $133–$400/month added to your payment.
- How to remove PMI: You can request removal when your equity reaches 20% of the original purchase price (80% LTV). Lenders must automatically cancel it when you reach 78% LTV through normal amortization (Homeowners Protection Act).
- Alternatives to PMI: 80-10-10 piggyback loans (80% first mortgage, 10% second mortgage, 10% down), lender-paid PMI (LPMI) in exchange for a higher rate, or VA loans if you qualify (no PMI ever).
- FHA MIP is different: FHA loans have Mortgage Insurance Premium (MIP) which behaves differently from PMI — it may last the life of the loan if you put less than 10% down.
The 28/36 Affordability Rule
Lenders use debt-to-income (DTI) ratios to qualify borrowers. The traditional 28/36 rule is:
| Ratio | Calculation | Threshold | What It Means |
|---|---|---|---|
| Front-End DTI | Monthly housing costs ÷ gross monthly income | ≤ 28% | Maximum for housing costs alone |
| Back-End DTI | (Housing + all monthly debts) ÷ gross monthly | ≤ 36% | Maximum total debt payments |
| FHA guidelines | Same calculation | 31% / 43% | Slightly more lenient |
| Qualified Mortgage | Back-end only | ≤ 43% | Maximum for QM loans (most conventional) |
| Some conventional | Back-end only | Up to 50% | With compensating factors (high credit score) |
Frequently Asked Questions
What credit score do I need for a mortgage?
For a conventional loan, most lenders require a minimum credit score of 620, though the best rates typically require 740+. FHA loans accept scores as low as 500 (with 10% down) or 580 (with 3.5% down). VA loans have no official minimum but lenders typically require 620+. A higher credit score directly affects your interest rate — the difference between a 620 and 760 score can be 0.5–1% in rate, translating to tens of thousands in lifetime interest.
What is an escrow account?
An escrow account is held by your lender to collect and pay property taxes and homeowners insurance on your behalf. Each month, 1/12 of your annual tax and insurance bills are added to your mortgage payment and held in escrow. When the bills are due, the lender pays them directly. Escrow is required for most loans with less than 20% down.
How much should I put down on a house?
20% is the traditional answer — it avoids PMI and typically gets you better rates. However, many first-time buyers put down 3–10% and use the remaining cash for reserves, renovations, or investments that may earn more than the PMI cost. The right amount depends on your financial situation, local market, and how long you plan to stay in the home.
When does it make sense to pay points to lower the rate?
Mortgage points (each point = 1% of loan amount) buy down your interest rate, typically by 0.25% per point. Paying points makes sense if: you plan to stay in the home long enough to recoup the upfront cost through monthly savings (usually 5–10 years), and you have the cash available without depleting your emergency fund. Divide the point cost by monthly savings to find your break-even point in months.
What is the difference between pre-qualification and pre-approval?
Pre-qualification is an informal estimate of how much you might be able to borrow, based on self-reported financial information — no credit check required. Pre-approval is a formal process where the lender verifies your income, assets, and credit and issues a conditional commitment to lend. Sellers take pre-approval much more seriously than pre-qualification in competitive markets.
Estimated principal & interest payments (30-year fixed)
Monthly P&I only — excludes taxes, insurance, HOA, and PMI.
| Loan amount | 3% rate | 5% rate | 7% rate | 9% rate |
|---|---|---|---|---|
| $100,000 | $422 | $537 | $665 | $805 |
| $200,000 | $843 | $1,074 | $1,331 | $1,609 |
| $300,000 | $1,265 | $1,610 | $1,996 | $2,414 |
| $400,000 | $1,686 | $2,147 | $2,661 | $3,218 |
| $500,000 | $2,108 | $2,684 | $3,327 | $4,023 |
Tips and common mistakes
- Forgetting escrow costs— property tax and insurance can add hundreds per month beyond P&I.
- Using gross income without debts — lenders look at DTI; car loans and student loans count.
- Skipping PMI math — down payments under 20% often require PMI until equity builds.
- Refinance break-even — closing costs must be recovered by monthly savings; model both sides in this tool.
More Q&A lives in the Frequently Asked Questions section below (matches FAQPage structured data).