Mortgage calculator

PITI stands for principal, interest, taxes and insurance: the four parts of a typical monthly mortgage payment. Principal and interest repay the loan itself, while property tax and homeowners insurance are usually collected by the lender into an escrow account and paid on your behalf. This calculator adds HOA dues and PMI on top, so the headline figure is the full amount leaving your account each month.

It uses the standard fixed-rate amortisation formula P × r ÷ (1 − (1 + r)^−n), where P is the loan amount (price minus down payment), r is the annual rate divided by 12 and n is the number of monthly payments. A $320,000 loan at 6.5% over 30 years has r = 0.0054167 and n = 360, which gives $2,022.62 a month and $408,142 of interest over the term.

Private mortgage insurance protects the lender on conventional loans where the down payment is under 20% of the price. It typically costs 0.3%–1.5% of the loan amount a year, paid monthly. The calculator charges your PMI rate whenever the down payment is under 20% and shows no PMI line at or above it. Once you reach 20% equity you can ask the lender to cancel it, and it ends automatically at 22%.

A 15-year loan has a much higher payment but builds equity faster and costs far less interest. On a $320,000 loan at 6.5%, the 30-year payment is $2,022.62 with $408,142 of total interest, while the 15-year payment is $2,787.54 with only $181,758. Lenders usually offer lower rates on 15-year loans too. Take the shorter term if the payment still leaves room for savings; otherwise choose 30 years and pay extra principal when you can.

Closing costs, points, title fees and moving costs are not part of the monthly payment or the total paid, and neither is the down payment itself. Property tax and insurance are assumed to stay flat, although both usually rise over time, and the rate is treated as fixed for the whole term. PMI is counted for every month of the term in the total, so the real total is lower once PMI is cancelled.