🏠 Mortgage Calculator

A full mortgage payment includes PITI: Principal (repaying the loan balance), Interest (cost of borrowing), Taxes (property taxes collected monthly in escrow), and Insurance (homeowner's insurance). Private Mortgage Insurance (PMI) is added when the down payment is less than 20% of the home price. Together, these make up your total monthly housing cost.

A larger down payment reduces your loan amount, which lowers both your monthly payment and total interest paid. It also helps you avoid PMI (typically 0.5–1.5% of the loan amount per year). Most lenders require a minimum 20% down payment to waive PMI on conventional loans. A 20% down payment on a $300,000 home saves roughly $75–200/month in PMI alone.

The interest rate is the annual cost of borrowing the principal. APR (Annual Percentage Rate) includes the interest rate plus lender fees, discount points, and other charges — expressed as a yearly rate. APR is almost always higher than the interest rate and gives a more accurate picture of the true cost. Always compare APR (not just rate) when shopping between lenders.

A 15-year mortgage has higher monthly payments (roughly 35–40% more) but saves enormously on total interest — often $100,000–$300,000 over the loan life. A 30-year mortgage has lower monthly payments and more cash flow flexibility. Choose 15 years if you can comfortably afford the higher payment; choose 30 years if cash flow is tight or you want to invest the payment difference.

Yes. Making extra principal payments reduces your outstanding balance, cutting the loan term and total interest. Even $100 extra per month on a 30-year mortgage can shorten it by 4–6 years. One full extra payment per year can cut 4–5 years. Always check your loan agreement for prepayment penalties, though most modern mortgages have none.

PMI is insurance that protects the lender — not the borrower — if the borrower defaults. It is required on most conventional loans when the down payment is less than 20%. PMI typically costs 0.5–1.5% of the loan amount annually, added to your monthly payment. Once you reach 20% equity (either through payments or appreciation), you can request PMI cancellation — or it automatically terminates at 22% equity under federal law.

An ARM starts with a fixed interest rate for an initial period (e.g., 5 years), then adjusts periodically based on a market index (typically SOFR or Treasury rates). A 5/1 ARM has a fixed rate for 5 years, then adjusts annually. ARMs usually offer lower initial rates than fixed-rate mortgages but carry the risk of payment increases if rates rise. They are best suited to buyers who plan to sell or refinance before the adjustment period begins.

A common guideline is to keep total monthly housing costs below 28% of your gross monthly income (front-end DTI ratio), and total debt payments below 43% (back-end DTI). For example, with a $8,000/month gross income, your mortgage, taxes, and insurance should not exceed $2,240. Use a pre-approval from a lender for a precise affordability figure based on your credit score and debt profile.

Closing costs are fees paid at the finalization of a real estate transaction. They typically range from 2–5% of the loan amount and include: loan origination fees, appraisal, title insurance, title search, attorney fees, prepaid interest, homeowner's insurance, and property tax escrow setup. On a $300,000 home, closing costs typically run $6,000–$15,000 and are paid in addition to the down payment.

Refinancing means replacing your existing mortgage with a new one — usually to get a lower interest rate, change the loan term, or convert from an ARM to a fixed rate. Refinancing makes financial sense when the new rate is at least 0.5–1% lower than your current rate and you plan to stay in the home long enough to recoup closing costs (typically 2–4 years, known as the break-even period).