How it works
A mortgage payment is not one number — it is principal and interest plus whatever your lender escrow account collects for taxes, insurance, HOA and possibly PMI. This calculator runs a month-by-month amortization on the loan itself, then stacks the recurring housing costs on top so the all-in figure matches what actually leaves your account. On the defaults — $450,000 home price, $90,000 down (20%), 6.5% rate, 30-year term, $5,400 annual property tax, $1,500 annual insurance, no HOA — the loan amount is $360,000. The standard amortization formula produces a principal-and-interest payment of $2,275.44. Property tax adds $450 per month and insurance $125, for an all-in payment of $2,850.44. With exactly 20% down the loan-to-value ratio is 80%, so PMI does not apply on day one; drop the down payment below 20% and the engine adds PMI until the balance crosses 80% of the original value. Over the full 360-month schedule the interest alone totals $459,160 — more than the principal borrowed — which is why the amortization curve matters: early payments are mostly interest, and extra principal payments in the first decade delete the most future interest. The Consumer Financial Protection Bureau publishes a plain-language guide to mortgage costs at consumerfinance.gov. Pair this page with the mortgage affordability calculator to size the purchase first, the refinance calculator if you already hold the loan, and rent vs buy when the down payment is still accumulating. Change one input at a time: rate moves the P&I line directly, while tax and insurance move the all-in number without touching the loan balance.
Formula
Loan amount P = home price − down payment
Monthly P&I M = P × r(1+r)^n / ((1+r)^n − 1) where r = rate/12, n = term×12
All-in monthly = P&I + property tax/12 + insurance/12 + HOA + PMI (if LTV > 80%)
Worked example — defaults
P = 450,000 − 90,000 = $360,000
P&I (6.5%, 360 mo) = $2,275.44
Tax + insurance = $450 + $125 = $575
All-in monthly = $2,850.44
Total interest over 30 years = $459,160
Tips
- Budget on the all-in number ($2,850 on the defaults), not the P&I alone — escrow is not optional once the loan closes.
- Exactly 20% down avoids PMI; 19% down can add hundreds per month until you reach 80% LTV.
- Extra payments apply entirely to principal — run the extra-payment slider to see months and interest saved.
- Property tax reassessments rise over time; the first-year escrow understates the long-run housing cost.
- Compare a 15-year term in the 15 vs 30 year mortgage calculator before committing to three decades.
Frequently asked questions
- What is included in the $2,850 monthly payment on the defaults?
- Principal and interest ($2,275.44), property tax ($450/month from $5,400/year), and homeowners insurance ($125/month from $1,500/year). HOA and PMI are zero on the default inputs because down payment is 20% and HOA is set to $0.
- How is the $2,275.44 P&I calculated?
- Standard amortization on $360,000 at 6.5% over 360 months. Each payment splits between interest on the remaining balance and principal reduction; the formula is M = P × r(1+r)^n / ((1+r)^n − 1).
- When does PMI drop off?
- When your loan balance falls below 80% of the original home value — either through paydown or appreciation. The engine models PMI month by month and stops charging it once LTV crosses 80%. At exactly 20% down on the defaults, PMI never applies.
- Why is total interest ($459,160) higher than the loan amount?
- Because interest is charged on the declining balance every month for 30 years. On a $360,000 loan at 6.5%, you repay $819,160 in P&I alone. That ratio — interest as a share of principal — is why extra payments early in the loan are disproportionately valuable.
- Should I make extra mortgage payments?
- At rates above roughly 5%, extra principal beats most guaranteed alternatives, but only after high-interest debt is cleared and an emergency fund is funded. On these defaults, even $200 extra per month clears the loan years early and saves five figures of interest — the schedule shows the exact effect.