Mortgage Payment Calculator — Calculate PITI Payments (2025)

Your total monthly mortgage payment, often called PITI, typically includes four main parts: Principal (repaying the loan balance), Interest (the cost of borrowing), Taxes (property taxes paid to your local government), and Insurance (homeowners insurance). If your down payment is less than 20%, it may also include Private Mortgage Insurance (PMI). Additionally, if you live in a managed community, Homeowners Association (HOA) fees might be part of your monthly budget, though usually paid separately.

There are several ways to lower your monthly payment: 1) Make a larger down payment to reduce the loan principal. 2) Secure a lower interest rate by improving your credit score or buying "points". 3) Choose a longer loan term (e.g., 30 years vs. 15 years), though this increases total interest paid. 4) Shop for cheaper homeowners insurance. 5) Challenge your property tax assessment if you believe it's too high.

Private Mortgage Insurance (PMI) protects the lender if you default on your loan. It's generally required if you put down less than 20% of the home's purchase price. PMI automatically terminates when your loan balance reaches 78% of the original home value. However, you can request to cancel it sooner once your loan-to-value (LTV) ratio drops to 80%, either through paying down the principal or if your home's value has significantly appreciated (requires an appraisal).

It depends on your financial goals. A 30-year mortgage offers lower monthly payments, making it easier to qualify for and freeing up cash for other investments. However, you'll pay significantly more interest over the life of the loan. A 15-year mortgage has higher monthly payments but comes with a lower interest rate and builds equity much faster, saving you tens of thousands of dollars in total interest costs.

Your credit score is a major factor in determining your interest rate. Borrowers with excellent credit (760+) typically qualify for the lowest rates. As your score drops, lenders view you as higher risk and charge higher rates. Even a 0.5% difference in interest rate can cost or save you tens of thousands of dollars over a 30-year loan term. Improving your score before applying is often worth the effort.

An escrow account is a holding account managed by your lender to pay your property taxes and homeowners insurance. Instead of paying these large bills annually, you pay 1/12th of the estimated annual cost each month with your mortgage payment. Most lenders require an escrow account if your down payment is less than 20%. Even if not required, many borrowers prefer it for the convenience of predictable monthly budgeting.

A common rule of thumb is the 28/36 rule: your mortgage payment (PITI) shouldn't exceed 28% of your gross monthly income, and your total debt payments (including mortgage, car loans, student loans, credit cards) shouldn't exceed 36%. However, FHA loans and some conventional programs allow for higher debt-to-income ratios, sometimes up to 43% or even 50% with strong compensating factors.

Yes, making extra payments toward your principal can save you a substantial amount of money and shorten your loan term. Because interest is calculated on your remaining balance, every dollar you pay toward principal reduces the interest charged in all future months. Even one extra payment per year can shave years off a 30-year mortgage and save thousands in interest.