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.
Not sure what home price you should target? Use our Mortgage Affordability Calculator to find out how much house you can afford based on your income, debts, and down payment before running the numbers here.