Home Loan Calculator

How it is calculated

Monthly P&I = P × [r(1 + r)^n] ÷ [(1 + r)^n − 1] + (Taxes + Insurance + HOA) ÷ 12

Worked example: Buying a $400,000 Home with 20% Down

Purchase price $400,000, 20% down ($80,000), 30-year fixed loan at 6.5%, $3,600/yr tax, $1,200/yr insurance.

1. Calculate loan principal: $400,000 − $80,000 = $320,000 borrowed.
2. Compute monthly interest rate: 6.5% ÷ 12 = 0.005417.
3. Apply amortization formula for 360 monthly payments: $320,000 × (0.005417 / (1 - (1+0.005417)^-360)) = $2,022.62/month.
4. Add monthly escrow: $300 taxes ($3,600/12) + $100 insurance ($1,200/12) = $400.
5. Sum total monthly commitment: $2,022.62 + $400 = $2,422.62 per month.

$2,422.62 total monthly payment ($2,022.62 principal & interest, $400 escrow).

How to Use This Calculator (Step-by-Step)

1. Enter the target purchase price of the home.
2. Specify your down payment amount in dollars (aiming for 20% avoids private mortgage insurance).
3. Select your preferred loan term (30 years for lower monthly outlay, 15 years for maximum interest savings).
4. Input the current market mortgage interest rate.
5. Add local annual property tax and insurance figures from property listings or municipal records.

Frequently asked questions

What is PITI in home lending?

PITI stands for Principal, Interest, Taxes, and Insurance. It represents the four fundamental components of a conventional monthly residential mortgage payment.

How does down payment size impact my mortgage?

A larger down payment lowers your loan balance, reduces monthly interest, and allows you to avoid Private Mortgage Insurance (PMI) if you put down 20% or more.

What is Loan-to-Value (LTV)?

LTV is the ratio of your loan amount compared to the appraised value of the property. Lenders use LTV to assess risk; an LTV of 80% or lower secures the most favorable rates.

Should I choose a 15-year or a 30-year loan term?

The how-to steps frame the choice directly: 30 years gives a lower monthly outlay, while 15 years gives maximum interest savings. The calculator lets you compare both terms on the same purchase price, down payment, and rate.

What does the escrow part of my monthly payment cover?

Escrow is the annual property tax plus annual home insurance plus monthly HOA dues, divided as shown in the formula: the monthly payment adds taxes, insurance, and HOA divided by 12 to the principal and interest figure.

What happens if I have no HOA dues?

Enter zero for monthly HOA dues, which is the default. The formula then adds nothing for HOA, and the total monthly commitment is just principal and interest plus the monthly tax and insurance shares.