A $400,000 home with 20% down at 6.5% over 30 years costs about $2,506 a month: $2,022.62 of principal and interest, $366.67 of property tax and $116.67 of insurance. With 10% down you also pay about $150 a month in PMI for the first 7 years 11 months.
What this calculates
Enter the home price, down payment, interest rate and term, then property tax, insurance, PMI and HOA dues. This works out your monthly payment and its parts, the loan, the total interest, when PMI ends and the payment after it does, with a year-by-year amortisation table. For background on PMI see the Consumer Financial Protection Bureau.
The formula
Principal and interest
P × r × (1 + r)ⁿ ÷ ((1 + r)ⁿ − 1)The other parts
tax = price × tax rate ÷ 12 · insurance = premium ÷ 12 · PMI = loan × PMI rate ÷ 12Monthly payment
principal and interest + tax + insurance + PMI + HOAP is the loan, r the monthly rate (the yearly rate ÷ 12 ÷ 100) and n the number of months. PMI is charged only if the down payment is under 20%, and ends once the balance reaches 80% of the home's price.
Worked example
With 10% down the loan is $360,000, principal and interest $2,275.44, and PMI at 0.5% adds $150.00: $2,908.78 until the balance reaches $320,000 after month 95, when it falls to $2,758.78.
When to use it, and the mistakes to avoid
Use it to see what you can afford, to compare down payments and terms, or to find out what PMI costs.
The mistakes that cost the most:
- Leaving out tax and insurance. They can add several hundred dollars a month.
- Forgetting PMI. Under 20% down it can add $100 or more a month.
- Assuming the payment stays the same. Tax, insurance and HOA dues rise over time.
- Stretching to the longest term. A 30-year loan costs far more in interest than a 15-year one.
- Ignoring closing costs. They are separate from the down payment.
FAQ
What is included in a monthly mortgage payment?
Principal and interest on the loan, plus property tax and home insurance (often collected in an escrow account), PMI if your down payment is small, and HOA dues if there are any. This calculator adds all five. On a $400,000 home with 20% down at 6.5%, principal and interest is $2,022.62 and the total is $2,505.96.
What is PMI and when do I pay it?
Private mortgage insurance protects the lender if you put down less than 20%. It is usually 0.3% to 1.5% of the loan a year, so $150 a month on a $360,000 loan at 0.5%. With 10% down it ends after about 7 years 11 months, when the balance reaches 80% of the home's price.
How can I get rid of PMI sooner?
Pay down the loan faster, or ask your lender to cancel it once your balance reaches 80% of the home's original value. By law it must end automatically when the scheduled balance reaches 78%. A new appraisal, if the home has risen in value, can also help.
Should I choose a 15-year or a 30-year mortgage?
A 15-year loan has a higher payment but costs far less interest: on $320,000 at the same rate the interest is under half. A 30-year loan keeps the payment lower. Choose the shortest term whose payment you can comfortably afford.
Are the property tax and insurance figures accurate?
They are estimates. Property tax varies by county and can change when your home is reassessed; the default of 1.1% of the price is typical. Home insurance depends on location and the home. Enter your own figures, and check your lender's Loan Estimate for the real ones.