How it works
Buying a home means committing to the largest single debt most households will ever take on, so understanding the true monthly carrying cost matters enormously. This mortgage calculator produces a PITI figure — Principal, Interest, Taxes, and Insurance — which is what your servicer actually collects from you each month, not just the narrow loan repayment in isolation.
You supply the home's purchase price, your down payment percentage, the annual interest rate your lender quoted, the repayment term, and your yearly property tax and homeowner's insurance premiums. The engine derives the amount you are actually borrowing, applies the standard amortization equation to produce the core principal-and-interest piece, then layers in one-twelfth of your tax and insurance bills to arrive at the full monthly obligation.
In practice, your servicer deposits the tax and insurance portions into an escrow account and pays the jurisdiction and the insurer when those annual bills come due — so even though they feel like part of one payment, they are technically held and disbursed separately from the loan repayment itself.
This estimate is for planning purposes and is not professional financial advice; consult a licensed loan originator for a binding quote.
The formula
M = P · r · (1+r)^n / ((1+r)^n − 1)
Here P is the borrowed amount after the down payment, r is the monthly rate (annual ÷ 12), and n is the total number of monthly installments (years × 12). The equation yields the fixed principal-and-interest portion; add monthly tax and insurance for the full PITI.
Worked example
Consider a $350,000 home purchase with 20% down, a 30-year fixed rate at 6.75%, $4,200 yearly property tax, and $1,400 annual homeowner's insurance.
Down payment: $350,000 × 0.20 = $70,000
Amount borrowed: $350,000 − $70,000 = $280,000
Monthly rate: 6.75% ÷ 12 = 0.5625% = 0.005625
Total installments: 30 × 12 = 360
M = 280,000 × 0.005625 × (1.005625)^360 / ((1.005625)^360 − 1)
(1.005625)^360 ≈ 7.68139
M = 280,000 × 0.005625 × 7.68139 / 6.68139
M ≈ 280,000 × 0.006466 ≈ $1,810.71
That $1,810.71 covers only principal and interest. Now layer in the escrow items:
Monthly property tax: $4,200 ÷ 12 = $350.00
Monthly insurance: $1,400 ÷ 12 = $116.67
Full PITI: $1,810.71 + $350.00 + $116.67 = $2,277.38
Over 360 months the core loan piece costs roughly $651,856, meaning about $371,856 in interest alone on top of the $280,000 you borrowed — a stark illustration of why the rate matters so much over three decades.
| Component | Monthly | Annual |
|---|---|---|
| Principal + interest | $1,810.71 | $21,728.52 |
| Property tax | $350.00 | $4,200.00 |
| Homeowner's insurance | $116.67 | $1,400.00 |
| Total PITI | $2,277.38 | $27,328.52 |
Things to watch
Down payments below 20% trigger private mortgage insurance (PMI) on most conventional loans — typically 0.3%–1.5% of the borrowed amount per year — which this tool does not automatically add. If your down payment is 10% on the same $350,000 home, you would finance $315,000 and likely owe an extra $80–$400 monthly for PMI until your equity crosses the 20% threshold.
Property tax figures can shift dramatically between neighboring jurisdictions; a $4,200 annual bill in one county might be $7,000 across the line for the same assessed value. Always confirm the current millage rate for the specific parcel, not a statewide average.
Homeowner's insurance premiums also rise after major weather events or when you add endorsements like scheduled personal property or higher dwelling limits, so the premium you paid on your last home may not reflect the policy a new purchase requires.
Finally, HOA dues, flood insurance, and specialty coverage for high-risk zones are separate from PITI but still come out of your pocket each month — budget for them alongside the figure this tool produces.