Mortgage Calculator
Estimate your total monthly house payment (PITI).
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Understanding Your Mortgage Payment
A mortgage is a loan used to purchase real estate. Your monthly mortgage payment is typically made up of four parts, known as PITI: Principal, Interest, Taxes, and Insurance. This calculator helps you estimate all four components to give you a clear picture of your total monthly housing cost.
The Components of PITI
- Principal: The portion of your payment that goes towards paying down the original loan balance.
- Interest: The cost you pay the lender to borrow the money. In the early years of your loan, a larger portion of your payment goes to interest.
- Taxes: Property taxes assessed by your local government, which are typically collected by your lender and paid on your behalf from an escrow account.
- Insurance: Homeowners insurance, which protects your home against damage. Like taxes, this is usually paid from your escrow account.
What is Private Mortgage Insurance (PMI)?
If you make a down payment of less than 20% on a conventional loan, your lender will likely require you to pay for Private Mortgage Insurance (PMI). This insurance protects the lender in case you default on the loan. Our calculator automatically estimates PMI if your down payment is below 20%.
Frequently Asked Questions (FAQ)
What does PITI stand for?
PITI stands for Principal, Interest, Taxes, and Insurance. These are the four main components of a monthly mortgage payment. Principal is the amount you borrowed, Interest is the cost of borrowing, Taxes refer to property taxes, and Insurance is your homeowners insurance premium.
How much of a down payment do I need to buy a house?
While a 20% down payment is often recommended to avoid Private Mortgage Insurance (PMI), it’s not always required. Many conventional loans are available with as little as 3% down, and government-backed loans like FHA loans require as little as 3.5% down. However, a larger down payment reduces your loan amount and monthly payment.
What is PMI (Private Mortgage Insurance)?
PMI is a type of mortgage insurance that protects the lender if you stop making payments on your loan. It is typically required on conventional loans if your down payment is less than 20% of the home’s purchase price. PMI is usually paid monthly as part of your total mortgage payment.
What is the difference between a 15-year and a 30-year mortgage?
A 30-year mortgage has lower monthly payments but you’ll pay significantly more in total interest over the life of the loan. A 15-year mortgage has higher monthly payments, but you’ll pay much less in total interest and build equity faster. 15-year mortgages also typically have lower interest rates than 30-year mortgages.