How to Calculate Your Monthly Mortgage Payment
Your monthly mortgage payment includes four components lenders call PITI: Principal, Interest, Taxes, and Insurance. Understanding each one helps you plan your budget and compare loan offers accurately.
The Mortgage Payment Formula
M = P × [r(1+r)ⁿ] / [(1+r)ⁿ − 1]
Where P = loan amount, r = monthly rate (annual ÷ 12), n = total payments. On a $280,000 loan at 6.8% for 30 years, your P&I alone is $1,827/month — plus tax, insurance, and any PMI.
PMI: The Hidden Cost of Small Down Payments
If your down payment is under 20%, lenders require Private Mortgage Insurance (PMI) — typically 0.5%–1.5% of the loan annually. On a $280,000 loan, that's $117–$350/month extra. The good news: you can request removal once your LTV reaches 80%, and lenders must cancel it automatically at 78% LTV.
The Power of Extra Payments
Adding even $100–$200/month to your principal can shave 4–7 years off a 30-year mortgage and save $50,000–$100,000 in interest. Use the Extra Payment field above to see your personalized savings.
30-Year vs. 15-Year: Which Is Better?
A 30-year mortgage has a lower monthly payment but you pay far more in total interest. A 15-year typically carries a 0.5%–0.75% lower rate and builds equity twice as fast. On a $300,000 loan, the 15-year saves roughly $150,000–$200,000 in interest total, but the monthly payment is ~$700–$900 higher.