What does a monthly mortgage payment include?

A standard US mortgage payment (PITI) typically consists of four components: Principal (loan balance repayment), Interest (lender finance charge), Property Taxes, and Homeowners Insurance (hazard insurance), plus Private Mortgage Insurance (PMI) if your down payment is below 20%.

Should I choose a 15-year or 30-year fixed mortgage?

A 30-year fixed mortgage offers lower monthly payments, providing greater budgeting flexibility. A 15-year mortgage has higher monthly payments but comes with a lower interest rate and saves tens of thousands of dollars in total interest paid over the life of the loan.

Homeownership & Loan Estimator

Mortgage Payment Calculator

Estimate your complete monthly payment with principal, interest, taxes, insurance, and PMI breakdown.

Property & Loan Details

USD ($)

Home Purchase Price ($) $400,000

Down Payment $80,000 (20%)

Loan Term

Interest Rate (%)

Property Tax ($/yr)

Home Insurance ($/yr)

Total Monthly Payment

$2,601

PITI & Escrow Included

Principal & Interest

$2,076/mo

Loan: $320,000

Taxes & Insurance

$525/mo

No PMI (20% down)

Monthly Payment Composition

Principal & Interest $2,076

Property Taxes $400

Home Insurance $125

Private Mortgage Ins (PMI) $0

How the US Mortgage Formula Works (PITI)

In the United States, home loan payments are calculated using standard amortization mathematics. The base monthly payment for Principal and Interest is calculated via the formula:

M = P × [ r(1 + r)ⁿ ] ÷ [ (1 + r)ⁿ - 1 ]

Where M is your total monthly principal and interest payment, P is the original loan amount, r is the monthly interest rate (annual rate divided by 12), and n is the total number of monthly payments (360 payments for a 30-year loan).