What is a Mortgage?
💡 Mortgage = A loan used to purchase or maintain a home, land, or other real estate.
Buying a home is often the largest financial decision of your life. Understanding your monthly financial commitment is crucial before signing any papers.
This tool breaks down your payment into Principal, Interest, Taxes, and Insurance (PITI), giving you a clear picture of your true monthly obligation.
Payment Parts
Principal
Repayment of the original loan balance.
Interest
Cost of borrowing paid to the lender.
Taxes
Property taxes held in escrow.
Insurance
Homeowners insurance to protect the property.
How Does It Work?
The calculator uses the standard amortization formula to determine the fixed monthly payment required to pay off the loan and interest over the set term.
M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1 ]
How to Use This Calculator
- 1Enter Home Value – The total purchase price of the property.
- 2Set Down Payment – The cash amount you are paying upfront.
- 3Adjust Interest Rate – The annual percentage rate (APR) from your lender.
- 4Select Loan Term – The duration of the loan (e.g., 15 or 30 years).
- 5Include Tax & Insurance – Optional estimates for a complete monthly picture.
Real-World Scenarios
🏠 The First-Time Buyer
Sarah wants to buy a $300,000 condo with 10% down at 6.5% for 30 years.
Monthly P&I
$1,706
Total Interest
$314k
💰 A smaller down payment increases the monthly cost and total interest significantly.
🔄 Refinancing Decision
Mark considers refinancing his $400k balance from 6% to 4.5% on a 15-year term.
Old Payment
$2,398
New Payment
$3,059
💰 Shorter terms increase monthly payments but save massive amounts in interest.
Frequently Asked Questions (FAQs)
Q. What is PITI?
It stands for Principal, Interest, Taxes, and Insurance—the four main components of a monthly mortgage payment.
Q. How does the down payment affect my mortgage?
A larger down payment reduces the loan amount, leading to lower monthly payments and less interest paid over the life of the loan.
Q. What is PMI?
Private Mortgage Insurance is usually required if your down payment is less than 20%.
Q. Fixed vs. Adjustable Rate (ARM)?
A fixed-rate mortgage has the same interest rate for the life of the loan, offering stability.
Benefits of Using a Mortgage Calculator
- ✓Budgeting Accuracy: Know exactly what you can afford before house hunting.
- ✓Scenario Comparison: Compare 15-year vs. 30-year terms or different interest rates.
- ✓Total Cost Visibility: See the long-term interest cost, not just the monthly payment.
- ✓Negotiation Power: Understanding the numbers gives you confidence when talking to lenders.
Terms & Conditions
- •Estimates Only: Actual payments may vary by lender.
- •Taxes & Insurance: These are estimates and vary by location.
- •Rates: Interest rates are subject to market change.
- •Privacy: Data is processed locally on your device.