How this mortgage calculator works
Your lender quotes a monthly payment for principal and interest (P&I), but the check you actually write each month is usually bigger. Most lenders collect property tax and homeowners insurance through an escrow account, and if you put down less than 20% on a conventional loan you also pay private mortgage insurance (PMI). This calculator adds all of those so you see the full payment, often called PITI (principal, interest, taxes, insurance) plus PMI and HOA dues.
The principal and interest part uses the standard fixed-rate amortization formula:
M = P × r / (1 − (1 + r)−n)
where P is the loan amount, r is the annual rate divided by 12 and n is the number of monthly payments. A $300,000 loan at 6.5% for 30 years works out to $1,896.20 a month in principal and interest.
How PMI is estimated
PMI is priced as a yearly percentage of the original loan, commonly somewhere between about 0.3% and 1.5% depending on your credit score and down payment. The calculator charges it every month while your balance is above 78% of the purchase price. That is the point where the federal Homeowners Protection Act requires lenders to cancel PMI automatically on most conventional loans when you are current on payments. You can usually ask to remove it earlier, at 80%, and a new appraisal showing your home has gained value can get you there sooner. FHA loans use a different mortgage insurance premium with its own rules, so treat the PMI line as a conventional-loan estimate.
Reading the amortization table
Early payments are mostly interest. On a 30-year loan at 6.5%, about 85% of the first year's P&I goes to interest. Each payment lowers the balance a little, so the interest portion shrinks and the principal portion grows. Adding even a small amount of extra principal each month cuts the total interest and shortens the loan, because every extra dollar skips all the interest it would have generated over the remaining years. Try $100 or $200 in the extra field and compare the "total interest" line.
Tips before you apply
- Use the real property tax from the listing or county records. Rates vary widely by state and even by town.
- Get an insurance quote early, especially in areas with hurricane, wildfire or flood risk.
- Compare a 15-year and a 30-year term: the payment is higher but the total interest is often less than half.
- Keep the full payment, not just P&I, comfortably inside your budget.
Frequently asked questions
How do I calculate a mortgage payment with PMI?
Calculate principal and interest with the amortization formula, then add the PMI rate times the loan amount divided by 12, plus monthly property tax, insurance and any HOA dues. For a $360,000 loan with 0.5% PMI, PMI adds $150 a month.
When does PMI go away?
On most conventional loans PMI cancels automatically when your balance is scheduled to reach 78% of the original home value. You can request cancellation at 80% if you have a good payment history.
What is the monthly payment on a $300,000 mortgage?
At 6.5% for 30 years, principal and interest is $1,896.20 a month. Taxes, insurance and PMI come on top of that, so the full payment is often several hundred dollars higher.
Do extra payments really save money?
Yes. Extra principal lowers the balance that interest is charged on. On a 30-year loan, a modest extra payment each month can save tens of thousands of dollars in interest and take years off the loan.