Mortgage Calculator

What is PITI?

Most online mortgage calculators show you "monthly payment" and mean only Principal & Interest — the loan-only portion. Real monthly housing cost is PITI: Principal, Interest, Taxes, Insurance. Add HOA and PMI when applicable, and you have what actually leaves your bank account each month.

The gap between P&I and PITI is usually 25–40%. A $2,000 P&I payment with $400/mo property tax, $125/mo insurance, $50/mo HOA, and $130/mo PMI is really a $2,705 monthly cost — 35% higher than the headline number.

The math

Monthly principal-and-interest payment uses the standard amortization formula:

P = L · r · (1+r)^n / ((1+r)^n − 1)

Where L is loan amount, r is monthly interest rate (annual ÷ 12), and n is total months (years × 12). The output is fixed for the life of the loan; what shifts is how each payment splits between interest and principal.

Each month: balance × monthly rate = interest accrued. payment − interest = principal paid down. Balance shrinks by principal. Repeat 360 times for a 30-year loan. The calculator above runs this simulation; the chart shows principal vs interest per year.

Year 1, 80% of your payment is interest. Year 25, 80% is principal. Mortgages are front-loaded — by design.

PMI: when and how much

Private Mortgage Insurance is required by most lenders when your down payment is under 20% — i.e., loan-to-value (LTV) ratio above 80%. PMI protects the lender if you default; it doesn't help you. Typical rate is 0.3–1.5% of the loan annually, paid monthly.

On a $320k loan at 0.5% PMI, that's $1,600/yr — about $133/month. It applies until your balance drops to 78% of the original home price (per the Homeowners Protection Act of 1998). At that point it's automatically removed; you can also request removal at 80% LTV with a fresh appraisal.

The decision: pay PMI for 5–8 years on the way to 78% LTV, or wait longer to save up 20% down. The waiting cost is rent and opportunity cost; the PMI cost is bounded and limited. For most buyers in appreciating markets, going in earlier with PMI wins. Use the calculator to model both.

Should you pay extra principal?

The honest answer: it depends on the rate and your other options.

• At 3–4% mortgage rate, the math favors investing extra cash instead of prepaying. A globally diversified equity portfolio has historically returned 5–7% real; you're trading that potential for a guaranteed 3–4% return on prepayment.
• At 6–7%+ mortgage rate, the math gets close — prepayment becomes competitive with expected real returns, and the certainty often wins on emotional grounds.
• Always pay extra if it gets you out of PMI sooner. That accelerates the LTV drop to 78% and removes a meaningful monthly cost.

One overlooked option: keep the 30-year term but voluntarily pay it as if it were a 15-year. You get all the math benefits of a 15-year payoff while retaining the option to go back to minimum payments during tight years. The calculator lets you test this.

How to lower the bill

1. Shop the rate. A 0.5% rate difference on $320k for 30 years is ~$36k of interest. Get at least 3 lender quotes; the spread is real.
2. Watch the closing costs. Origination fees, points, title insurance, escrow setup. Total often 2–4% of loan amount; some are fixed, some are negotiable.
3. Re-shop insurance every 2 years. Bundling with auto often helps; loyalty penalties are real. A $200/yr savings is $6k over a 30-year hold.
4. Fight property tax assessments. If your county over-assessed your home, file an appeal. A $50/mo reduction is $18k over 30 years.
5. Drop PMI as soon as you can. Voluntary prepayment to hit 78% LTV faster is one of the highest-ROI moves available, especially early in the loan when the principal balance is still high.
6. Consider a shorter term. 15-year mortgage rates run 0.5–1% below 30-year. The monthly payment is higher, but total interest drops by 50–60%.

What this calculator doesn't model

• Closing costs. Add 2–4% of loan amount to the down payment line if you want to include them in the "out of pocket on day one" picture.
• Adjustable-rate mortgages. ARMs reset periodically. The model assumes your rate is fixed for the life of the loan.
• Tax deductibility. Mortgage interest is deductible only if you itemize, and most US homeowners no longer do (post-2018 standard deduction increase). Your effective rate may be slightly lower than nominal if you itemize.
• Home appreciation / depreciation. The calculator shows what the home costs you, not whether it's a good investment. That's a separate calculation involving local price growth and your alternative housing cost.
• Rent comparison. "Buy vs rent" requires modeling rent growth, investment returns on the down payment, and maintenance — none of which are here. We may ship a separate buy-vs-rent calculator.
• Insurance escalation. Property tax and home insurance rise over time. The model holds them constant in today's dollars; total cost is conservative.