Mortgage Calculator

What's in a mortgage payment (PITI)

Most US mortgage payments bundle four separate costs into one monthly bill, commonly abbreviated PITI: Principal (the portion that reduces what you owe), Interest (the lender's fee for the loan, calculated on your remaining balance), Taxes (your share of local property tax, usually collected monthly and paid on your behalf), and Insurance (homeowners insurance, plus PMI if your down payment is under 20%). The calculator above breaks all four out separately so you can see exactly where your money goes each month, not just the headline number.

How amortization actually works

A fixed-rate mortgage uses the same total payment every month for the life of the loan, but the mix between principal and interest shifts dramatically over time. Early payments are interest-heavy because interest is charged on your full remaining balance, which is largest at the start. As the balance shrinks, more of each fixed payment goes toward principal instead. On a 30-year loan at a typical rate, it's common for the first several years of payments to be more than half interest — which is why paying extra toward principal early has an outsized effect on total interest paid.

The math behind it: your monthly principal-and-interest payment (M) is calculated from the loan principal (P), monthly interest rate (r, your annual rate divided by 12), and number of payments (n) using M = P × [r(1+r)ⁿ] / [(1+r)ⁿ − 1]. That single formula is what powers every row of the schedule above — each month, interest is charged on the opening balance, the rest of the payment reduces principal, and the closing balance carries forward to the next row.

Fixed-rate vs. adjustable-rate mortgages

A fixed-rate mortgage locks your interest rate for the entire term, so your P&I payment never changes — the calculator above assumes a fixed rate. An adjustable-rate mortgage (ARM) starts with a lower introductory rate for a set period (commonly 5, 7, or 10 years), then adjusts periodically based on a market index, which can push payments up or down. ARMs can make sense if you expect to sell or refinance before the fixed period ends; fixed-rate loans are generally the safer default for buyers planning to stay long-term, since they remove interest-rate risk entirely.

How your down payment and credit affect your rate

Lenders price risk into your interest rate. A larger down payment reduces the lender's exposure if you default, which typically earns a lower rate — and crossing the 20% down payment threshold specifically eliminates PMI, the extra insurance premium required on smaller down payments to protect the lender. Credit score has an even bigger effect: borrowers with excellent credit (740+) routinely qualify for meaningfully better rates than borrowers in the fair-credit range, which compounds into tens of thousands of dollars over a 30-year term. Improving your credit score or saving a larger down payment before applying are the two highest-leverage moves a buyer can make before shopping for a rate.

Closing costs and mortgage points

Beyond the down payment, expect closing costs of roughly 2–5% of the loan amount, covering the lender's origination fee, appraisal, title insurance, recording fees, and prepaid items like the first year of homeowners insurance and a few months of property tax held in escrow. Some lenders also offer discount points — an upfront fee, typically 1% of the loan per point, paid to buy down your interest rate for the life of the loan. Points make sense when you plan to stay in the home long enough for the monthly savings to outweigh the upfront cost; as a rule of thumb, divide the point cost by the monthly savings to find the break-even month, then compare that to how long you actually expect to keep the loan.

How PMI is actually calculated — and when it drops off

Private Mortgage Insurance typically costs 0.5–1.5% of the original loan amount per year, split into monthly installments and added to your PITI payment — on a $350,000 loan, that's roughly $1,458–$4,375 a year, or $122–$365 a month. The rate depends mainly on your credit score and loan-to-value ratio: a smaller down payment or lower credit score pushes the rate toward the higher end. By federal law (the Homeowners Protection Act), lenders must automatically cancel PMI once your balance reaches 78% of the home's original value, and you can request cancellation yourself once you hit 80% — so PMI is a temporary cost tied directly to how much equity you've built, not a permanent fee.

What an escrow account actually does

Most lenders require an escrow account for property tax and homeowners insurance, which is why those two line items show up inside your monthly mortgage payment even though you're not paying the county or the insurer directly. Each month, the lender collects roughly 1/12th of your annual tax and insurance bill and holds it in the escrow account, then pays those bills on your behalf when they come due. Lenders re-run an escrow analysis annually — if your property tax or insurance premium goes up (which it usually does), your monthly payment adjusts even though your P&I stays fixed, which is why a "fixed-rate" mortgage payment can still change year to year.

What a rate lock protects you from

Mortgage rates move daily, and the rate you're quoted when you apply isn't guaranteed until your lender "locks" it — typically for 30, 45, or 60 days while your loan is processed and underwritten. Locking protects you if rates rise before closing, but most locks also mean you don't automatically benefit if rates fall (unless your lender offers a float-down option, usually for an extra fee). Locking too early risks the lock expiring before closing — which can trigger extension fees — while locking too late leaves your final payment exposed to rate movement, so most lenders recommend locking once your closing date is firmly set, not at the start of shopping.

Refinancing: when it's worth it

Refinancing replaces your current mortgage with a new one, usually to capture a lower rate, shorten the term, or convert an ARM to a fixed rate. Because refinancing carries its own closing costs, it's typically only worth it when the new rate is at least 0.5–1 percentage point lower than your current one, or when your goals have changed — for example, switching from a 30-year to a 15-year term once your income has grown. Use the same break-even logic as with points: total closing costs divided by the monthly payment savings tells you how many months it takes to come out ahead.

Five ways to pay less total interest

1. Make one extra payment a year. Applied to principal, this alone can cut years off a 30-year loan.
2. Choose a 15-year term if you can afford the payment. Rates are usually lower and the loan is paid off in half the time.
3. Put down 20% or more. Removes PMI and often earns a better rate outright.
4. Round up your payment. Even an extra $50–$100 a month compounds meaningfully over 30 years.
5. Refinance when rates drop meaningfully. A 1%+ rate reduction can be worth the closing costs if you plan to stay in the home for several more years.