Mortgage Calculator

Principal & Interest (P&I) is the base payment that pays down your loan. Early payments are mostly interest; over time more goes toward principal.

Property Tax is collected monthly by your lender and held in escrow, then paid to your local government annually. Rates vary widely by location — 1–2% of home value per year is typical.

Home Insurance protects against damage and liability. Lenders require it. Expect $800–$2,000/year depending on location and coverage.

PMI (Private Mortgage Insurance) is required when your down payment is less than 20%. It protects the lender — not you — and typically costs 0.5–1.5% of the loan per year. It can be cancelled once you reach 20% equity.

Principal (P) — the portion of each payment that reduces your loan balance. Early in a 30-year loan, this is a small fraction of each payment.

Interest (I) — the lender's fee, calculated on your remaining balance each month. In the early years, interest makes up roughly 75–85% of each payment.

Property Tax (T) — collected monthly and held in escrow, then paid to your local government. Property taxes average 1–2% of home value per year nationally. On a $400,000 home at 1.2%, that's about $400/month.

Home Insurance (I) — required by all mortgage lenders. Typical cost is $800–$2,000 per year ($67–$167/month), varying by location and coverage level.

PMI (Private Mortgage Insurance) — required when your down payment is less than 20%. Typically 0.5–1.5% of the loan per year, cancellable once you reach 20% equity.

HOA Fees (A) — if your home is in a managed community (condo, townhome, planned development), monthly HOA fees are part of your true housing cost even though they're not part of the mortgage itself.

Together these are sometimes called PITIA — Principal, Interest, Tax, Insurance, and Association fees.

PMI is triggered when your down payment is less than 20% of the home's purchase price. The lender requires it because a smaller down payment means higher risk if you default.

Example: $350,000 home with a 10% down payment → $315,000 loan. At 0.5–1.5% PMI annually, that's $131–$394/month added on top of principal, interest, taxes, and insurance.

How to cancel PMI: Once your loan balance reaches 80% of the home's original value, request cancellation in writing. Your lender may require a formal appraisal. Under federal law, lenders must automatically cancel PMI when you reach 78% LTV — but you don't have to wait. Requesting at 80% saves you months of premiums.

Tip: Putting 20% down eliminates PMI entirely. On a $350,000 loan, that's $131–$394/month saved from day one.

Every extra dollar you pay goes directly toward your principal balance. A lower balance means less interest accrues the following month, so more of every future regular payment also reduces principal. This compounding effect accelerates over the life of the loan.

Example: $350,000 mortgage at 7% for 30 years. Standard P&I: $2,329/month. Add $200/month extra:

• Total interest saved: ~$54,000
• Loan paid off: ~5 years earlier

Enter an amount in the Extra Monthly Payment field in the calculator above. The amortization table will update automatically to show your new payoff date and total interest cost.

The 30-year mortgage offers a lower required payment and more monthly flexibility. The 15-year saves approximately $289,000 in total interest — but requires a payment that's $721/month higher.

Many financial advisors suggest choosing the 30-year if you'll consistently invest the monthly payment difference, since long-term market returns have historically outpaced mortgage rates. The 15-year is the better choice if you want a guaranteed return in the form of interest savings and a faster path to owning your home outright.

Use FinWiser's mortgage comparison calculator to model both scenarios side by side with your specific numbers.