Frequently Asked Questions

What is included in a monthly mortgage payment?

A typical monthly mortgage payment has four core parts, known as PITI: Principal, Interest, Taxes, and Insurance. Principal and interest repay the loan itself, while property taxes and homeowners insurance are usually collected monthly and held in escrow to pay those bills. If your down payment is under 20% you may also pay PMI, and if your home is in a homeowners association you will owe HOA dues on top.

How is my monthly mortgage payment calculated?

The principal and interest portion comes from three numbers, the loan amount, the interest rate, and the term, combined with the standard amortization formula to produce one level payment for the life of the loan. Property tax, homeowners insurance, PMI, and any HOA dues are then added on top to give your full monthly payment. The calculator does all of this instantly as you type.

Do property taxes and insurance change my payment?

Yes. Property taxes and homeowners insurance are a real part of your monthly cost, usually collected in twelfths and paid from escrow, and together they often add a quarter or more of the total payment. In the guide's example, taxes and insurance add about $550 a month to a $400,000 home purchase. Because these vary a lot by location, a principal-and-interest-only estimate can be misleading, so the calculator lets you enter both.

What is an amortization schedule?

An amortization schedule is a month-by-month table showing how each payment splits between interest and principal, and how your loan balance falls over time. Because interest is charged on your remaining balance, early payments are mostly interest and later ones are mostly principal. The calculator includes a full amortization schedule so you can see this for your own loan.

What is escrow, and why did my payment change?

Escrow is an account your servicer uses to hold part of each monthly payment toward your property tax bill and homeowners insurance premium, then pay those bills when they fall due. Because tax assessments and premiums move from year to year, servicers re-check the account annually and reset the escrow portion to match. That is why a fixed-rate loan can still have a total payment that shifts a little each year: the principal and interest half is genuinely fixed, the escrow half is re-estimated.

Why is nearly all of my first payment interest?

Because interest is charged on the balance you still owe, and at the start you owe everything. On the $320,000 loan at 6.5% over 30 years used throughout this site, the first payment of $2,022.62 breaks into $1,733.33 of interest and just $289.28 of principal. As the balance falls the interest slice falls with it, and principal finally overtakes interest at payment 233.

What is the difference between principal and interest?

Principal is the money you borrowed and have not yet repaid. Interest is the fee charged for holding it. Each month's payment settles that month's interest first, and only what is left over reduces the principal, which in turn lowers the interest charged the following month.

What is a loan-to-value ratio?

Loan-to-value (LTV) is your loan amount divided by the home's value, written as a percentage. Putting 20% down on a $400,000 home leaves a $320,000 loan, an LTV of 80%. Lenders lean on it heavily: it helps set your rate, it decides whether PMI is required on a conventional loan, and PMI cancellation is defined against it.

What is APR, and how is it different from the interest rate?

The interest rate is what you pay each year to borrow the principal, and it is the number that drives your monthly payment. The APR is a broader measure of what the loan costs: it reflects the interest rate plus points, broker fees, and other charges you pay to get the loan. Two offers with the same rate can have quite different APRs, so the APR is the fairer number for comparing them.

What is the difference between a fixed-rate and an adjustable-rate mortgage?

A fixed-rate loan keeps the same interest rate for the whole term, so the principal and interest payment never changes. An adjustable-rate mortgage starts with an introductory fixed period, then resets periodically against a published index plus a margin, with caps limiting how far the rate can move at the first adjustment, at later adjustments, and over the life of the loan. This calculator models a fixed rate. The guide explains how to bound an ARM by running it at both the intro rate and the capped ceiling.

What are discount points?

Points are an optional fee paid at closing to buy your interest rate down for the life of the loan. Whether they pay off depends entirely on how long you keep the loan, which is arithmetic rather than opinion. See discount points for the break-even math.

Where can I look up a mortgage term I don't recognize?

The mortgage terms glossary defines the vocabulary that shows up on a Loan Estimate and a closing disclosure, from amortization and escrow to origination fee and title insurance, in plain language.

What is PMI, and when can I stop paying it?

PMI (private mortgage insurance) protects the lender, not you, and is usually required on a conventional loan when your down payment is under 20%. It typically costs about 0.3% to 1.5% of the loan amount per year. You can request removal once you reach 20% equity, and by law the lender must cancel it automatically once your balance reaches 78% of the original value, as long as you're current on payments. Learn more in our PMI guide.

How much house can I afford?

A common guideline is the 28/36 rule: keep your total housing payment at or below 28% of your gross monthly income, and all your monthly debt payments combined at or below 36%. Work backwards from that 28% target to a home price, and read our full affordability guide for a step-by-step example.

Should I choose a 15-year or 30-year mortgage?

A 30-year mortgage gives you a lower, more flexible monthly payment, while a 15-year mortgage costs far less interest overall and builds equity faster in exchange for a higher monthly payment. Neither is universally better, so see our 15- vs 30-year guide for a side-by-side comparison with real numbers.

Does my down payment affect how much house I can afford?

Yes, significantly. A larger down payment reduces the loan you need for the same home, lowers your monthly payment, can help you avoid PMI, and may earn a better rate. All of that increases the price you can comfortably afford for a given monthly budget.

How much should I put down on a house?

There is no single right answer: 20% avoids PMI on a conventional loan, but smaller down payments are common and buying sooner has its own value, while emptying your savings to reach 20% carries its own risk. The trade-offs, and the loan programs that allow less, are laid out on down payment explained.

What are closing costs?

Closing costs are the one-time fees due when the sale completes, covering things like origination, appraisal, title work, recording, and prepaid escrow. They are separate from your down payment and both are owed at the same time, which is the part that surprises first-time buyers. See closing costs explained for what they typically include.

Does a bigger down payment get me a better interest rate?

Often, yes. Lenders price partly on loan-to-value, so more money down can mean a lower rate as well as a smaller loan and no PMI requirement. How much lower depends on the lender, the loan program, and your credit profile, so it is worth asking for quotes at more than one down payment level.

How much does paying an extra $200 a month save?

On the $320,000 loan at 6.5% over 30 years used across this site, an extra $200 a month toward principal clears it in 23 years 5 months, which is 6 years 7 months early, and cuts total interest from $408,142.36 to $302,713.69. That is $105,428.67 saved for $56,200 of extra payments. The extra payment field on the calculator runs the same comparison on your own figures.

Do biweekly payments pay off a mortgage faster?

They do, because paying half the monthly amount every two weeks means 26 half-payments a year, the equivalent of 13 monthly payments instead of 12. The gain is real but more modest than the marketing suggests, and some servicers charge to set it up. The numbers are worked through on biweekly mortgage payments.

When does refinancing make sense?

Refinancing swaps your loan for a new one, so it only helps if the monthly saving outruns the closing costs of the new loan before you sell or refinance again. That crossover point is the break-even, and calculating it is the whole decision. See refinance break-even.

Does the calculator include HOA dues and extra payments?

Yes. HOA dues are an optional monthly field and are counted in the total payment and the breakdown chart. The extra payment field applies an additional amount to principal each month and reports the new payoff date and the interest saved. One thing to note: the amortization schedule covers principal and interest only, because taxes, insurance, PMI, and HOA are not part of the loan itself.

Why is my lender's quote different from this estimate?

Because a quote is built from your real credit profile, the property's actual tax assessment, a real insurance quote, and the lender's own pricing including any points and fees. This tool works only from the numbers you type. Use it to set a budget and compare scenarios, then treat the Loan Estimate your lender issues as the authoritative figure.

Does the calculator work on a phone?

Yes, on any screen size. The inputs, the breakdown chart, and the full amortization table are all built to work on a phone, a tablet, and a desktop equally, with the schedule scrolling sideways rather than shrinking to unreadable text.

Is this calculator private?

Yes. All of the math runs entirely inside your web browser, and the numbers you enter are never uploaded to any server, stored, or transmitted to us. There are no accounts and no sign-ups. See our privacy policy for details.

Is the calculator free?

Yes, the calculator is completely free to use, with no sign-up required. It stays free through advertising served by Google.