The Mortgage Payment Calculator
A payment calculator looks simple, but the quoted figure is often only half the story. Your true monthly payment has four parts, and knowing all four is the difference between a comfortable budget and a stressful one.
The four parts: PITI
- Principal — the portion that reduces your loan balance.
- Interest — the cost of borrowing, highest in the early years.
- Taxes — your property taxes, usually collected monthly into escrow.
- Insurance — homeowners insurance, plus mortgage insurance if your down payment was below the threshold.
The formula underneath
Principal and interest come from a standard amortization formula based on your loan amount, rate and term. The calculator solves for a fixed monthly figure that pays the loan off exactly over the term — which is why, early on, most of your payment is interest and only a little is principal. That ratio flips as the years pass.
Add even a small amount to principal each month and watch the payoff date move years earlier and the total interest drop sharply. A payment calculator with an “extra principal” field is a motivation machine — use it.