Mortgage Payment Calculator (PITI Estimator)
Don't get blindsided by the sticker price. The purchase price of a home is just the beginning. Use this calculator to estimate your PITI (Principal, Interest, Taxes, and Insurance)—the real monthly amount you will budget for housing. Compare loan terms and down payments to see how small changes can save you tens of thousands in interest.
Loan Details
Enter your loan details to see your monthly payment breakdown
Understanding Your Monthly Payment (PITI)
Many buyers focus only on the loan principal and interest, but your total monthly housing cost is often 25-35% higher once taxes and insurance are added. Whether you pay these through an 'Escrow' account or directly, they are critical to your budget. Here is the breakdown:
- Principal: The portion that actually pays down your debt and builds equity.
- Interest: The fee you pay the bank. In the early years of a 30-year loan, this can be 70%+ of your payment.
- Taxes (Property Tax): A fee paid to your local government, usually bundled into your monthly mortgage bill.
- Insurance (Homeowners & PMI): Protection for your home. If you put down less than 20%, you will likely pay an extra fee called PMI (Private Mortgage Insurance).
The Strategic Decision: 30-Year vs. 15-Year
Scenario A: The "Cash Flow" Priority
- The Setup: Buy a $375,000 home with 20% down ($75,000), resulting in a $300,000 Loan at 6.5% for 30 Years.
- Monthly P&I: ~$1,896.
- Total Interest Paid: ~$382,000.
- The Verdict: Lower monthly payments make the home more affordable month-to-month, but you pay more than double the loan amount over time.
Scenario B: The "Wealth Building" Priority
- The Setup: Same home ($375k) and down payment ($75k), but financing the $300,000 Loan at 6.0% for 15 Years.
- Monthly P&I: ~$2,531.
- Total Interest Paid: ~$155,000.
- The Verdict: The payment is ~$635 higher per month, but you own the home in half the time and save over $220,000 in interest.
Home Financing Essentials
Q: How much down payment do I really need?
A: The "20% rule" is a myth for buying, but real for saving money. You can buy a home with as little as 3% to 3.5% down (Conventional or FHA), but doing so triggers PMI (Private Mortgage Insurance), which typically costs 0.5%–1.5% of your loan annually until you reach 20% equity.
Q: What is "Escrow"?
A: An Escrow account is a forced savings account managed by your lender. Instead of paying a huge property tax and insurance bill once a year, you pay 1/12th of the estimated total every month with your mortgage. The lender holds this money and pays the bills for you when they are due.
Q: Does making extra principal payments really help?
A: Yes, significantly. Because interest is calculated on your *current* balance, every extra $100 you pay reduces the balance immediately, lowering the interest charged next month. Making just one extra payment per year can shave 4 to 6 years off a 30-year mortgage, depending on your interest rate.
Q: How much house can I afford?
A: Lenders look at your Debt-to-Income (DTI) ratio. While many will approve total debts up to 43% (or higher), the traditional 28/36 Rule is the gold standard for financial safety. Your housing costs (PITI) shouldn't exceed 28% of your gross monthly income, and your total debt (housing + cars + student loans) shouldn't exceed 36%. Use these ratios to set a safe budget before browsing listings.
Q: What are "Closing Costs" and how much are they?
A: In addition to your down payment, you must pay closing costs—fees for the appraisal, title search, and loan origination. Expect to pay 2% to 5% of the purchase price. For a $500,000 home, that is an extra $10,000 to $25,000 due on signing day.
Q: Should I pay "Points" to lower my interest rate?
A: It depends on how long you stay. Buying "Discount Points" means paying 1% of the loan amount upfront to lower your rate by roughly 0.25%. This is usually a smart move only if you plan to keep the mortgage for more than 6-7 years (the "break-even point"). If you might move or refinance sooner, skip the points.
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This calculator/tool is provided for educational and illustrative purposes only and should not be relied upon as financial, investment, or legal advice. Results are estimates based on your inputs and standard formulas; actual outcomes may vary. Always consult with a qualified financial professional before making any financial decisions.