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Mortgage payment
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Your full monthly house payment, total interest, and how much extra principal payments save.
- Principal and interest$2,022.62
- Property tax$333.33
- Home insurance$166.67
- Loan amount$320,000 (80% of price)
- Total interest over the loan$408,142
| End of year | Balance left | Principal paid |
|---|---|---|
| 5 | $299,555 | $20,445 |
| 10 | $271,284 | $48,716 |
| 15 | $232,189 | $87,811 |
| 20 | $178,129 | $141,871 |
| 25 | $103,373 | $216,627 |
| 30 | $0 | $320,000 |
Taxes and insurance usually rise over time, so the escrow part of the payment will change.
How this calculator works
Your total payment combines principal and interest (from the amortization formula), property tax, homeowners insurance, private mortgage insurance (PMI) when you put down less than 20%, and HOA dues. PMI falls off automatically once the balance reaches 78% of the original price. Adding extra principal each month shortens the loan and can save tens of thousands in interest.
A worked example
The example is a $400,000 home with $80,000 down, so the loan is $320,000, at 6.5% for 30 years. Principal and interest are $2,022.62 a month. Property tax at 1% of the price adds $333.33, and $2,000 a year of insurance adds $166.67. The full payment is $2,522.62. Over 30 years the interest alone comes to $408,142, more than the amount borrowed.
Three changes show how the pieces move. Adding $200 a month in extra principal pays the loan off in 23 years and 5 months and saves about $105,429 in interest. Choosing a 15-year term raises principal and interest to $2,787.54 but cuts total interest to $181,758. Putting down $40,000, which is 10%, adds $150 a month of mortgage insurance and brings the payment to $2,925.44.
How to read your results
Lenders call the full payment PITI: principal, interest, taxes, and insurance. Only principal and interest are fixed on a fixed-rate loan. Taxes and insurance are usually collected in an escrow account and tend to rise over the years, so your payment can change even though your rate does not.
The table shows the balance left every five years. In the example, after 10 years of payments totaling about $243,000 in principal and interest, the balance has fallen by only $48,716. Early payments are mostly interest, which is why extra principal early in the loan saves so much.
Common mistakes to avoid
- Comparing homes by principal and interest only. Property tax and insurance vary widely from one county and one house to the next. Use the real figures for each home.
- Forgetting mortgage insurance. With less than 20% down on a conventional loan, expect private mortgage insurance until you have enough equity.
- Spending all of your cash on the down payment. Closing costs usually run 2% to 5% of the loan, and a new house always needs something. Keep a reserve.
- Leaving out HOA dues and maintenance. A common rule of thumb is to set aside about 1% of the home's value each year for upkeep.
Common questions
What is included in a monthly mortgage payment?
Principal and interest on the loan, plus property tax and homeowners insurance when the lender collects them in escrow. Private mortgage insurance and HOA dues are added where they apply.
When does PMI go away?
On a conventional loan, the lender must cancel it automatically when your balance is scheduled to reach 78% of the home's original value, and you can ask to cancel at 80%. FHA loans have their own mortgage insurance rules, which often last much longer.
Is it better to pay extra principal or invest?
Extra principal earns a guaranteed return equal to your mortgage rate. Investing may earn more or less. Many people do some of each, after building an emergency fund and capturing any employer retirement match.
How much does a 1% change in rate matter?
On a $320,000 30-year loan, principal and interest are about $2,023 a month at 6.5% and about $2,237 at 7.5%, a difference of roughly $215 a month.
Disclaimer: This calculator is for education and planning only and is not financial advice. Your actual payment depends on your credit, loan type, and the rate you lock, and on property taxes and insurance where you live. Ask your lender for a Loan Estimate before you commit.
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