Buying a home is one of the biggest financial decisions you'll make, and understanding your monthly mortgage payment is the first step. Your payment isn't just principal and interest — it includes property taxes, insurance, and often PMI. This guide breaks it all down.
Skip the manual math — use our Mortgage Calculator for instant results.
The Mortgage Payment Formula
The standard formula for calculating your monthly principal and interest (P&I) payment is:
M = P × [r(1+r)ⁿ] ÷ [(1+r)ⁿ – 1]
Where:
- M = monthly payment
- P = loan principal (amount borrowed)
- r = monthly interest rate (annual rate ÷ 12)
- n = total number of payments (loan term in months)
Example: A $400,000 loan at 6.87% (30-year fixed) gives a monthly P&I of approximately $2,626.
PITI: The Four Components
Your full monthly payment (PITI) includes:
- Principal: The amount that reduces your loan balance
- Interest: The cost of borrowing — highest in early years
- Taxes: Property taxes, typically 1-2% of home value annually
- Insurance: Homeowners insurance ($800-$1,500/year typical)
If your down payment is less than 20%, you'll also pay PMI (Private Mortgage Insurance), usually 0.5-1% of the loan amount per year.
How Interest Rates Affect Your Payment
Using our Mortgage Calculator, you can see how rates impact your payment:
| Rate | Monthly P&I | Total Interest (30yr) |
|---|---|---|
| 6.00% | $2,398 | $463,352 |
| 6.50% | $2,528 | $510,183 |
| 7.00% | $2,661 | $558,035 |
| 7.50% | $2,796 | $606,798 |
A 1% rate difference on a $400,000 loan changes your monthly payment by about $263 and your total interest by nearly $95,000 over 30 years.
15-Year vs 30-Year Mortgage
A 15-year mortgage has higher monthly payments but much lower total interest. On a $400,000 loan at 6.87%:
- 30-year: $2,626/mo, total interest $545k
- 15-year: $3,571/mo, total interest $243k
The 15-year saves over $300,000 in interest, but requires a $945 higher monthly payment.
How Much Home Can You Afford?
Use our Home Affordability Calculator to see how much house you can afford based on your income, down payment, and local tax rates. Lenders typically use a 28% front-end DTI ratio — meaning your housing payment shouldn't exceed 28% of your gross monthly income.
Calculate Your Mortgage Payment
Our Mortgage Calculator shows your full monthly payment including taxes and insurance, plus a complete amortization schedule.