In short
A mortgage payment is more than the loan repayment. This calculator adds property tax and home insurance to the principal and interest, so you see the full amount leaving your account each month, plus the loan balance year by year.
What makes up a mortgage payment
Principal and interest repay the loan itself. The payment stays the same for a fixed-rate loan, but the split changes: early payments are mostly interest, later ones mostly principal.
Property tax and home insurance are often collected with the payment and held in an escrow account. Even when you pay them separately, they are part of what the home costs you each month.
Worked example
A 400,000 home with 20% down (80,000) leaves a 320,000 loan. At 6.5% over 30 years the principal and interest come to 2,022.62 a month. Property tax of 1.1% a year adds 366.67 and insurance of 1,500 a year adds 125.00, for a total of 2,514.28 a month.
Over 30 years you pay 408,142 in interest, more than the loan itself. The same loan over 15 years costs 2,787.54 a month in principal and interest, but only 181,758 in interest.
How to lower your payment
A bigger down payment shrinks the loan. With 10% down instead of 20%, the example's principal and interest rise from 2,022.62 to 2,275.44 a month, and some lenders add mortgage insurance on top.
A lower rate matters most over long terms, so compare offers from several lenders. A longer term lowers the payment but raises the total interest.
Costs this calculator leaves out
Mortgage insurance (PMI), homeowners' association fees, maintenance and closing costs are not included. Add them to your budget separately, or include regular fees in the insurance field as a yearly amount.
Frequently asked questions
How is the monthly payment calculated?
The loan repayment uses the standard amortisation formula: payment = L × r × (1 + r)^n / ((1 + r)^n − 1), where L is the loan, r the monthly rate and n the number of months. Property tax and insurance are divided by 12 and added.
What down payment should I make?
20% is a common target because many lenders then waive mortgage insurance, but many loans allow less. Keep enough cash for closing costs and an emergency fund.
Does this work for adjustable-rate mortgages?
It shows the payment at the rate you enter. With an adjustable rate the payment changes when the rate resets, so try a few higher rates to see what you could face.
Where do I find the property tax rate?
Your local tax office or a recent property listing usually shows the yearly tax. Divide it by the home price and multiply by 100 to get the percentage.
Methodology
Principal and interest follow the standard fixed-rate amortisation formula with monthly payments, r = annual rate / 12. Property tax is the percentage of the home price per year, divided by 12; insurance is the yearly amount divided by 12. Values are rounded for display only.
This calculator gives estimates for information only and is not financial advice. Your lender's offer, taxes and insurance costs will differ.
Last reviewed: