How to estimate your monthly mortgage payment
Before you ever talk to a lender, you can get a solid ballpark of what a home will actually cost each month. Here's what goes into that number — in plain English — and how to figure it out in under a minute.
Reviewed by Robert · Updated June 2026
The four pieces of a mortgage payment ("PITI")
Lenders break your monthly housing payment into four parts, often abbreviated PITI:
- Principal — the chunk that pays down what you borrowed.
- Interest — the lender's charge for the loan, highest in the early years.
- Taxes — annual property taxes, usually collected monthly into an escrow account.
- Insurance — homeowner's insurance, also typically escrowed.
There's often a fifth piece: PMI (private mortgage insurance), which lenders add when your down payment is under 20% of the home price. It typically runs about 0.5%–1% of the loan per year and drops off once you reach 20% equity.
The formula, in plain English
Principal and interest are calculated with the standard amortizing-loan formula. The key inputs are your loan amount (price minus down payment), your interest rate, and your term (usually 15 or 30 years). You don't need to crunch it by hand — that's exactly what a calculator is for — but it helps to know what each lever does:
- A longer term lowers the monthly payment but means you pay far more interest overall.
- A higher rate raises the payment significantly — even half a percentage point matters.
- A bigger down payment shrinks the loan and can eliminate PMI.
A quick worked example
Say you're looking at a $400,000 home with $80,000 down (20%, so no PMI), a 6.8% rate on a 30-year loan, with $4,800/yr in property tax and $1,200/yr in insurance:
- Loan amount: $320,000
- Principal & interest: roughly $2,087/mo
- Taxes + insurance: about $500/mo
- Estimated total: ~$2,587/mo
Change any input and the number moves — which is the whole point of running it before you commit.
How to pay less over time
- Add a little extra to principal each month. Even $100–$200 can shave years off the loan and save tens of thousands in interest.
- Consider bi-weekly payments. Paying half your payment every two weeks results in one extra full payment per year.
- Put down 20% if you can. It removes PMI entirely and lowers the loan.
- Compare a 15-year term. The payment is higher, but the lifetime interest savings are dramatic.
The mortgage calculator models all of these — extra payments, bi-weekly schedules, and shorter terms — so you can see the exact savings for your situation.
CapitalCalcs provides educational estimates, not financial advice. Actual rates, taxes, and terms vary by lender and location — confirm details with a licensed professional. See how we calculate for the formulas and assumptions behind these tools.