What is included in a monthly mortgage payment?
A full mortgage payment typically includes four components known as PITI: Principal (reducing your loan balance), Interest (cost of borrowing), Taxes (property tax collected monthly and held in escrow), and Insurance (homeowner's insurance and, if applicable, PMI). This calculator includes all four.
What is PMI and when do I need it?
Private Mortgage Insurance (PMI) is required by most lenders when your down payment is less than 20% of the home price. PMI typically costs 0.5%–1.5% of the loan amount annually. Once you reach 20% equity, you can usually request to have PMI removed.
What is an amortization schedule?
An amortization schedule shows every payment over the life of the loan, broken down into the portion that reduces your principal balance and the portion that pays interest. In the early years of a mortgage, most of your payment goes toward interest. Over time, more goes toward principal.
How does the interest rate affect my payment?
Even a small change in interest rate has a large impact over a 30-year mortgage. For example, on a $320,000 loan, the difference between 6% and 7% interest is about $200 per month — and over $70,000 in total interest over the life of the loan.