How the mortgage payment is calculated
The fixed-rate principal-and-interest payment spreads the borrowed principal across equal monthly payments while interest is charged on the outstanding balance. Taxes, insurance and HOA values are then added as separate monthly planning costs.
Formula
M = P × [i(1+i)^N] / [(1+i)^N - 1]M is the monthly principal-and-interest payment, P is the loan principal after the down payment, i is the monthly interest rate, and N is the number of monthly payments.
Worked example
For a $400,000 home with an $80,000 down payment, the modeled loan principal is $320,000. At 6.5% for 30 years, the calculator computes principal and interest, then adds the monthly portions of the entered property tax and insurance plus any HOA dues.
Assumptions and limitations
This is a planning estimate for a fixed-rate amortizing loan. It does not quote a lender, determine eligibility, include closing costs, infer PMI, or predict future tax and insurance changes.
Frequently asked questions
What is included in the monthly payment estimate?
The main monthly estimate combines principal and interest with monthly portions of the annual property tax and insurance values you enter, plus HOA dues. It does not automatically include mortgage insurance, utilities, maintenance or other ownership costs.
How is the mortgage principal and interest payment calculated?
The calculator uses the standard fixed-rate amortizing loan payment formula. A zero-interest loan is handled separately by dividing principal evenly across the selected number of months.
Does a larger down payment reduce interest?
A larger down payment reduces the amount borrowed. With the same rate and term, a smaller principal generally reduces both the monthly principal-and-interest payment and total interest paid.
Are property taxes and insurance exact?
No. Those values are user-entered planning assumptions. Actual bills can change over time and escrow treatment varies by lender.
Does this calculator include PMI?
Not automatically. Private mortgage insurance rules vary by loan program, lender and borrower profile, so it is not inferred from the inputs on this page.