Mortgage Calculator

About the Mortgage Calculator

The mortgage calculator estimates the full monthly housing payment — known in the U.S. mortgage industry as PITI, for Principal, Interest, Taxes, and Insurance. In addition to those four components, the tool optionally adds HOA dues and estimates private mortgage insurance (PMI) when the down payment is below 20% of the purchase price. The result is the figure you should budget against, not the smaller principal-and-interest number lenders sometimes quote in advertisements.

Mortgages are amortized with the same annuity formula as any other installment loan, but two features make them unique. First, terms are long — typically 15 or 30 years in the U.S. — which dramatically amplifies the effect of small rate differences. Second, federal law governs when private mortgage insurance can be cancelled, so a borrower's true monthly payment can drop mid-term. The Homeowners Protection Act of 1998 (12 U.S.C. Sec. 4901 et seq.) sets the rules for PMI cancellation on most conventional mortgages closed on or after July 29, 1999.

This tool estimates PMI at approximately 0.55% of the loan balance annually, a mid-range figure for borrower-paid PMI on a 30-year conventional loan with less than 20% down. Actual PMI pricing varies by credit score, loan-to-value ratio, loan type, and insurer. According to mortgage data firm Freddie Mac's quarterly PMI reports, annual premiums typically range from 0.30% to 1.50% of the loan balance.

Property taxes vary widely by jurisdiction. The Tax Foundation's 2024 report shows the median U.S. effective property tax rate is about 1.1% of home value, with New Jersey at 2.23% and Hawaii at 0.32% at the extremes. Enter the annual figure from the local tax assessor for the property you are evaluating, not a national average.

How It Works

The principal and interest portion uses the standard amortization formula:

M = (P x r) / (1 - (1+r)^(-n))

where P = loan principal (home price minus down payment),
      r = monthly rate (annual rate / 12),
      n = number of payments (years x 12)

Property tax, home insurance, and HOA dues are simply divided by 12 and added to the monthly payment. PMI is estimated as:

PMI_monthly = (loan_balance x annual_pmi_rate) / 12
PMI applies when loan-to-value (LTV) exceeds 80% (i.e. down payment < 20%)

PMI cancellation rules per the Homeowners Protection Act of 1998 (12 U.S.C. Sec. 4901) are:

• Borrower-requested cancellation at 80% LTV: The borrower may request PMI cancellation when the loan-to-value ratio reaches 80%, based on the original property value or a current appraisal the borrower pays for. The borrower must be current on payments and have a good payment history.
• Automatic cancellation at 78% LTV: The lender must automatically cancel PMI when the loan-to-value ratio reaches 78% of the original property value, based on the original amortization schedule (or, if earlier, the midpoint of the loan term).
• Midpoint of amortization: For a 30-year loan, the midpoint is 15 years. Even if the loan balance never drops to 78% LTV (e.g. due to a low down payment), PMI must be cancelled at the midpoint.

Important: The HPA does not apply to FHA loans (which require mortgage insurance premiums under 24 CFR Part 203), VA loans (which use a one-time funding fee instead of monthly mortgage insurance), USDA loans (with annual fees under 7 CFR 3555.67), or lender-paid mortgage insurance. For FHA loans, mortgage insurance premiums typically last for the life of the loan if the down payment is under 10%, per HUD Mortgagee Letter 2013-04.

Worked Examples

Using the default inputs: $450,000 home, $90,000 down (20%), $360,000 loan at 6.875% for 30 years. Monthly rate = 0.005729, n = 360. The annuity factor evaluates to 0.8721. Monthly principal and interest = (360000 x 0.005729) / 0.8721 = $2,364.94. Property tax = $5,400 / 12 = $450.00. Insurance = $1,500 / 12 = $125.00. Total PITI = $2,364.94 + $450.00 + $125.00 = $2,939.94. No PMI applies because LTV is exactly 80%.

Now consider the same home with only $45,000 down (10%). The loan is $405,000, LTV is 90%, and PMI applies. The principal-and-interest payment rises to (405000 x 0.005729) / 0.8721 = $2,660.56. PMI is estimated at (405000 x 0.0055) / 12 = $185.62. Total PITI becomes $2,660.56 + $450.00 + $125.00 + $185.62 = $3,421.19 — a $481 increase per month, or about $5,772 per year. That is the real cost of putting down less than 20%.

For a 15-year mortgage at 6.0% on the same $360,000 loan: n = 180, r = 0.005. Monthly payment = (360000 x 0.005) / (1 - (1.005)^(-180)) = $3,037.88. Total interest over 15 years = $3,037.88 x 180 - $360,000 = $186,819. Compare to the 30-year at 6.875%: $2,364.94 x 360 - $360,000 = $491,380. The 15-year costs $673 more per month but saves $304,561 in interest over the life of the loan.

PMI cancellation scenario: on a 30-year $405,000 loan at 6.875% with 10% down, the borrower-requested 80% LTV threshold is reached when the balance falls to $360,000. Using a standard amortization schedule, that occurs at approximately payment 99 (year 8.25). At that point, the borrower can request PMI cancellation under 12 U.S.C. Sec. 4901 and save the $185.62 per month going forward, provided they are current and pay for an appraisal if required. The HPA's automatic cancellation at 78% LTV would occur a few years later on the original amortization schedule, or at the midpoint of the loan term (year 15) if the schedule has not yet reached 78% LTV.

When to Use This Tool

Use the mortgage calculator when you need to:

• Estimate the true monthly housing payment (PITI) for budgeting, not just principal and interest.
• Compare 15-year vs. 30-year terms to see how much interest a shorter term saves.
• Model the impact of a smaller down payment, including estimated PMI cost.
• Plan for the year you can request PMI cancellation under the HPA 1998 rules.
• Compare homes at different price points or in different tax jurisdictions.
• Decide whether paying points to lower the rate makes sense over your expected holding period.
• Stress-test affordability against future income, taxes, and insurance premiums.

Limitations & Disclaimer

This calculator uses standard amortization math and estimated PMI pricing; it does not model adjustable-rate mortgages, interest-only periods, FHA MIP rules, VA funding fees, USDA annual fees, jumbo loan pricing, or lender-paid PMI. Property tax estimates vary widely by jurisdiction and the actual rate from your local assessor may differ materially from the default. Home insurance premiums depend on coverage limits, deductibles, and risk factors not captured here. For real mortgage decisions, obtain a Loan Estimate from a licensed lender and consult a qualified mortgage advisor. See our disclaimer for full details.

Frequently Asked Questions

Last updated: September 9, 2026  ·  Author: HT99 Tools Editorial Team