What is included in a PITI mortgage payment?

PITI stands for Principal, Interest, Taxes, and Insurance. Principal reduces the loan balance; Interest is the lender fee for borrowing; Taxes represent local municipal property taxes held in escrow; and Insurance covers homeowner hazard insurance and private mortgage insurance (PMI) if applicable.

How does a 15-year mortgage compare to a 30-year mortgage?

A 15-year mortgage features higher monthly payments due to the accelerated payoff schedule, but typically offers a lower interest rate (0.50% to 0.75% lower) and saves more than 60% in total lifetime interest compared to a 30-year mortgage.

When is Private Mortgage Insurance (PMI) required?

On conventional loans, PMI is generally required if your down payment is less than 20% of the home purchase price (loan-to-value ratio > 80%). Under the federal Homeowners Protection Act, you can request PMI cancellation once your loan balance reaches 80% of original value.

How much interest can I save by making one extra payment per year?

Making one additional monthly payment each year (or switching to bi-weekly payments) on a 30-year mortgage at 6.5% interest will typically pay off the loan 4 to 6 years early and save tens of thousands of dollars in cumulative interest.

What is the difference between interest rate and APR on a mortgage?

The interest rate is the base cost of borrowing the principal. APR (Annual Percentage Rate) incorporates the interest rate plus upfront lender fees, origination points, processing costs, and mortgage insurance to represent the true annual cost of credit.

Can I calculate loans with custom property tax rates?

Yes. You can enter your specific annual property tax amount or calculate it based on local county assessment percentages.

Interactive Verified Calculator

Mortgage Payment & Amortization Calculator

This calculator computes your exact monthly mortgage payment (principal and interest) plus monthly property taxes, home insurance, and private mortgage insurance (PMI) with full multi-decade amortization schedules.

Loan & Purchase Parameters

Home Purchase Price

Down Payment (20%)

Interest Rate (APR)

Loan Term

Annual Property Tax

Annual Home Insurance

Estimated Monthly Payment

$2,842 /mo

Total monthly PITI payment (Principal, Interest, Taxes & Insurance).

Principal & Interest:$2,275

Property Taxes:$450

Home Insurance:$117

Total Loan Principal:$360,000

Total 30-Yr Interest:$459,160

Interactive Live Breakdown

Total Loan Amount$360,000Home Price minus Down Payment

Total Interest Paid$459,160Cost of borrowing over 30 years

Total Loan Cost$819,160Principal plus lifetime interest

Mathematical Proof & Formula

Formula & Governing Equations

The standard fixed-rate amortizing loan equation determines the fixed periodic payment required to reduce loan principal to zero over n compounding periods.

Governing Equation

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

Variables & Measurement Units

Symbol	Variable Name	Units	Description
M	Monthly Payment	USD ($/month)	Fixed monthly principal and interest installment.
P	Principal Balance	USD ($)	Total initial home loan amount after down payment.
r	Periodic Interest Rate	Decimal (r = APR / 12)	Annual percentage interest rate divided by 12 monthly cycles.
n	Total Number of Payments	Months (n = Years × 12)	Total scheduled monthly payments (e.g., 360 for 30 years).

Calculation Assumptions:

Interest is compounded monthly on the unpaid principal balance.
Payments are made at the end of each monthly period.
Property taxes and insurance escrow remain constant unless adjusted in model inputs.

Step-by-Step Proof

Worked Example: 30-Year Fixed Mortgage with 20% Down Payment

Purchasing a $500,000 home with a 20% down payment ($100,000) at 6.75% annual interest on a 30-year fixed term with $6,000/yr property taxes and $1,500/yr homeowner insurance.

Example Numerical Inputs

Home Price$500,000

Down Payment$100,000 (20%)

Loan Amount (P)$400,000

Interest Rate (APR)6.75%

Loan Term30 Years (360 Months)

Annual Property Tax$6,000

Annual Home Insurance$1,500

Step-by-Step Calculation Steps:

Calculate monthly periodic rate r = 0.0675 / 12 = 0.005625.
Compute compounding factor (1 + r)^360 = (1.005625)^360 ≈ 7.5028.
Calculate base principal & interest M = 400,000 × [0.005625 × 7.5028] / [7.5028 - 1] = 400,000 × 0.042203 / 6.5028 = $2,594.30.
Add monthly property taxes = $6,000 / 12 = $500.00.
Add monthly homeowner insurance = $1,500 / 12 = $125.00.
Total Monthly PITI Payment = $2,594.30 + $500.00 + $125.00 = $3,219.30.

Final Output: $2,594.30/month (Principal & Interest) | $3,219.30/month Total PITI

Over 30 years, you will pay a total of $933,948.00 in principal and interest, consisting of $400,000 principal repayment and $533,948.00 in cumulative interest.

How to Use This Calculator

Enter the total home purchase price or expected purchase budget.
Specify your down payment amount in dollars or as a percentage (20% avoids PMI).
Input the annual interest rate (APR) quoted by your mortgage lender.
Select loan duration (typically 15 or 30 years).
Optionally input annual property tax, insurance, and HOA dues for a complete PITI breakdown.
Review your monthly payment, interest versus principal distribution, and full amortization schedule.

How It Is Calculated (Algorithm)

•The initial loan principal is determined by subtracting your down payment from the home price.
•Monthly principal and interest are calculated using the standard annuity amortization formula.
•In early loan years, the majority of each payment covers interest on the large outstanding balance.
•As principal is paid down, the interest portion shrinks, allowing a steadily increasing percentage of each monthly payment to build home equity.

When to Use & Practical Applications

✓Comparing affordability across different home price brackets before making an offer.
✓Evaluating the trade-offs between 15-year and 30-year fixed-rate mortgages.
✓Assessing the financial impact of increasing your down payment to eliminate private mortgage insurance (PMI).
✓Planning extra monthly principal prepayments to shorten loan duration and save tens of thousands in interest.

Limitations & Real-World Caveats

!Does not account for future municipal property tax reassessments or insurance premium inflation.
!Closing costs, transfer taxes, and loan origination fees are excluded from the recurring monthly PITI payment.
!Adjustable-rate mortgages (ARMs) with variable rate caps after initial fixed periods require dynamic rate modeling.

Authoritative Source & Standard

Reference Standard: 12 CFR Part 1026 (Truth in Lending - Regulation Z) & Fixed-Rate Amortization Rules

Publishing Body: Consumer Financial Protection Bureau (CFPB)
Standard Citation: CFPB Mortgage Disclosure & Amortization Compliance Standards
Applicable Version: 2026 Regulatory Review Edition

Compounding Law