Mortgage Calculator

This essential **Mortgage Calculator** estimates your **total monthly house payment**, known as **PITI** (Principal, Interest, Taxes, and Insurance). Quickly see the **true cost** of homeownership, not just the loan payment.

Enter Property & Loan Details

Estimate your total monthly PITI payment.

Property & Down Payment

Loan & Fixed Costs

Total Monthly PITI Payment

$0

Principal & Interest (P&I): $0
Taxes & Insurance (TI): $0
Total Interest Paid: $0

What is a Mortgage Calculator?

A **Mortgage Calculator** is an essential tool for **home buying**. It estimates the **total monthly house payment**, which is often much higher than just the principal and interest portion of the loan. Lenders use the **PITI** method (Principal, Interest, Taxes, and Insurance) to give borrowers a complete picture of the recurring costs of **homeownership**.

The Formula for Calculating PITI

The **PITI** payment is calculated by first determining the fixed **Principal & Interest (P&I)** payment using the amortization formula, and then adding the monthly escrow amounts for Taxes and Insurance (TI).

1. Principal & Interest (P&I) Payment

P&I = P × r × (1 + r)n / [ (1 + r)n - 1 ]

Where P = Loan Amount, r = Monthly Rate, n = Total Months.

2. Total Monthly PITI Payment

PITI = P&I + (Annual Taxes / 12) + (Annual Insurance / 12)

Solved Example (Based on Default Inputs)

Using the default inputs (**Home Price: $300,000**, **Down Payment: $60,000**, **Rate: 6.5%**, **Term: 30 Years**):

1. Calculate Loan Amount (P)

P = $300,000 - $60,000 = **$240,000**

2. Calculate Monthly P&I

P&I ≈ **$1,516**

3. Calculate Monthly TI

Taxes ($3,600 / 12) = $300

Insurance ($1,200 / 12) = $100

TI = $300 + $100 = **$400**

**Total Monthly PITI Payment = $1,516 + $400 = $1,916**

The final **PITI** is **$1,916**, showing that **Taxes and Insurance** add a significant **$400** to the monthly payment.

Practical Applications & Use Cases

Use the **Mortgage Calculator** for responsible **home buying** and planning:

  • **Set a Budget:** The **PITI** is the number you need for accurate monthly budgeting. It’s the total cash outflow required to keep your home.
  • **Compare Scenarios:** Instantly see the impact of small changes, such as a **lower interest rate**, a larger **down payment**, or changing the **loan term** from 30 years to 15 years.
  • **Avoid PMI:** If your **down payment** is less than **20%** of the home price, the calculator can help you budget for the extra cost of **Private Mortgage Insurance (PMI)**, which is typically 0.5% to 1% of the loan amount annually.
  • **Determine Affordability:** The **PITI** calculation is the primary driver for a lender's **Debt-to-Income (DTI) ratio** check, helping you understand how large a loan you can realistically qualify for.

Standard or Common Reference Values

For realistic mortgage planning, rely on these industry benchmarks:

  • **Loan Term:** The most common options are **30 years** (lower payment, higher total interest) and **15 years** (higher payment, lower total interest).
  • **Down Payment:** Aim for **20%** of the home price to avoid paying **PMI** and secure the best **interest rates**.
  • **Property Taxes:** Rates vary widely by location but are typically estimated as **0.5% to 2%** of the home's value annually.
  • **Homeowners Insurance:** Generally estimated as **0.3% to 0.5%** of the home's value annually.

Frequently Asked Questions (FAQ)

1. What does PITI stand for?

**PITI** is an acronym that stands for **Principal**, **Interest**, **Taxes**, and **Insurance**. It represents the **total monthly cost** of **homeownership** and is the primary figure used by lenders to determine loan affordability.

2. Why do lenders require Private Mortgage Insurance (PMI)?

Lenders typically require **PMI** when a borrower puts down less than **20%** of the home's purchase price. **PMI** protects the lender in case the borrower defaults on the loan, as a lower **down payment** signifies a higher risk.

3. What percentage of the payment is usually interest in the beginning?

In the early years of a mortgage, the vast majority of the **monthly payment** (often **80% or more**) goes toward paying off the **interest**, due to the **amortization schedule**. As the loan matures, the portion dedicated to the **principal** increases.

Understanding your mortgage is key to financial success. For a full payment schedule, use our Loan Amortization Calculator, or see how much house you can afford with the Loan Affordability Calculator.

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