Mortgage Calculator — Monthly Payment, PMI, Amortization & Extra Payment Savings

How to Use the Mortgage Calculator

1. Enter the home price you are considering. This is the full purchase price before your down payment.
2. Set your down payment percentage. A 20% down payment eliminates PMI. Lower down payments (3.5–10%) mean lower upfront cash but add PMI to your monthly payment.
3. Enter the loan term (typically 30 years for lower payments, 15 years to pay less interest) and your current interest rate. Shop at least 3 lenders — even a 0.25% rate difference can save tens of thousands over the loan life.
4. Fill in property tax rate (check your county assessor's website — typically 0.5–2.5% depending on state), annual home insurance (average $1,500–$2,000/yr for most homes), and any HOA dues.
5. If your down payment is below 20%, set your PMI rate (typically 0.3–1.5% annually depending on credit score and LTV). The calculator automatically zeroes out PMI when down payment reaches 20%.
6. Optionally enter an extra monthly payment to see how much interest you save and how many years earlier you pay off the loan. Even an extra $100–$200/month can cut years off your mortgage.
7. Review the total monthly payment, the breakdown by component, the amortization schedule, and the extra payment savings panel.

How Mortgage Payments Work

A fixed-rate mortgage payment is calculated using an amortization formula: P&I = Loan × [r(1+r)^n] / [(1+r)^n − 1], where r is the monthly interest rate (annual rate ÷ 12) and n is the total number of payments (years × 12). Early in the loan, most of each payment goes toward interest; as the balance shrinks, more goes toward principal. This is why the first decade of a 30-year mortgage barely dents the principal balance.

What PITI Means

PITI stands for Principal, Interest, Taxes, and Insurance — the four components that make up your true monthly housing payment. Lenders underwrite against your full PITI payment (plus HOA and PMI if applicable) when evaluating affordability, not just the P&I. Your PITI is what you actually write the check for each month.

Most mortgage lenders will also escrow property taxes and insurance, collecting a monthly fraction (1/12 of the annual bill) as part of your payment and paying the bills on your behalf at year end. The full PITI is the number that matters for your budget — this calculator shows all five components so you have no surprises at closing.

How PMI Works and When It Drops Off

Private Mortgage Insurance (PMI) is required by conventional lenders when your down payment is below 20% of the home's value. PMI protects the lender (not you) in case you default. Typical PMI costs 0.3–1.5% of the loan amount per year, paid monthly. On a $360,000 loan, 0.5% PMI costs $150/month — real money.

The good news: you can request PMI cancellation once your loan balance reaches 80% of the original purchase price (20% equity). Under the Homeowners Protection Act, lenders must automatically cancel PMI when the balance reaches 78% of the original value. This calculator shows you the exact year PMI drops off based on your amortization schedule — a milestone worth tracking.

The Power of Extra Payments

Extra monthly payments go entirely toward principal, which reduces the balance that generates future interest. Because interest compounds on the remaining balance, even small extra payments early in the loan have an outsized impact on total interest paid. An extra $200/month on a 30-year, $320,000 loan at 7% cuts the loan from 30 years to about 23 years and 3 months — saving nearly $119,000 in interest. That is a guaranteed, tax-equivalent return equal to your mortgage rate.

Before making extra payments, confirm your loan has no prepayment penalty (most conventional loans don't). Also consider whether the extra cash might earn a higher after-tax return elsewhere — if your mortgage rate is 7% and you can earn 10% in a diversified index fund, the math favors investing. But the guaranteed, risk-free nature of mortgage paydown is compelling for risk-averse borrowers.

Frequently Asked Questions

• Should I get a 15-year or 30-year mortgage?
  A 15-year mortgage has a higher monthly payment but typically a lower interest rate (0.5–0.75% less) and you pay dramatically less total interest — roughly half. A 30-year mortgage gives you a lower required payment, which provides more cash-flow flexibility; you can always make extra payments voluntarily to pay it off faster. The 30-year with disciplined extra payments gives maximum flexibility. The 15-year is better for buyers who want the forced savings discipline. Use this calculator to compare both scenarios side by side by changing the loan term.
• Should I rent or buy instead of getting a mortgage?
  Whether to rent or buy depends on far more than the monthly payment — it requires comparing total cost of ownership, opportunity cost of the down payment, home appreciation, and how long you plan to stay. Our Rent vs Buy Calculator runs the full analysis including breakeven year and total cost comparison for both scenarios. If your breakeven is 3–4 years away and you plan to stay longer, buying is likely the better financial choice; if breakeven is 8+ years, renting while investing the down payment may win.
• What is a good interest rate for a mortgage?
  Mortgage rates change daily with the bond market. As of mid-2026, 30-year fixed rates are in the 6.5–7.5% range for well-qualified borrowers. Your actual rate depends on credit score (760+ for the best rates), loan type (conventional vs FHA vs VA), down payment amount, loan size, and lender pricing. Shopping at least 3 lenders is critical — lenders regularly quote 0.25–0.5% apart on the same borrower profile, which can translate to tens of thousands of dollars over a 30-year loan. Use Credible or Bankrate (links below) to compare live rates.
• How do I get rid of PMI?
  PMI can be eliminated in several ways: (1) reach 20% equity through normal amortization — the calculator shows exactly when that happens; (2) make extra payments to accelerate reaching 20% equity; (3) request PMI cancellation in writing once your balance is at or below 80% of the original purchase price — the lender may require a new appraisal; (4) refinance once you have 20%+ equity, though closing costs must be weighed against savings; (5) buy with a 20%+ down payment from the start. Lenders are legally required under the HPA to automatically cancel PMI at 78% LTV based on the original amortization schedule.
• How is the amortization schedule calculated?
  Each month, interest is calculated as the remaining balance times the monthly rate (annual rate ÷ 12). The remainder of your payment goes to principal. As principal falls, less of each payment goes to interest and more to principal — this is amortization. Early payments on a 30-year loan at 7% are roughly 70% interest / 30% principal; by year 20 the split is closer to 50/50. The amortization table in this calculator shows the year-end balance, principal paid, and interest paid for each year of the loan.
• Can I use this calculator for a rental property mortgage?
  Yes — the P&I calculation is identical regardless of property type. However, for a rental investment property you will also want to analyze NOI, cap rate, cash-on-cash return, and DSCR. Our Rental Property Cash Flow Calculator covers all of these metrics specifically for buy-and-hold investment properties, including how the mortgage payment fits into the overall cash flow analysis.