Estimate Your Monthly Mortgage Payments

How Mortgage Payments Are Calculated

A mortgage payment is made up of four components, often called PITI: principal, interest, property taxes, and insurance. The principal and interest portion is calculated using the standard amortization formula, which spreads your loan balance across equal monthly payments over the life of the loan. Each payment is split between reducing the principal balance and paying interest on the remaining balance.

Early in the mortgage term, a larger portion of each payment goes toward interest. As the principal balance decreases over time, more of each payment goes toward principal reduction. This is why even small differences in interest rate can have a significant impact on total interest paid over a 30-year mortgage.

Property taxes are assessed annually by your local municipality and are typically between 0.5% and 1.5% of the property value in California, though rates vary by county. Home insurance protects against damage, theft, and liability, and is usually required by your lender. Both are included in this calculator to give you an accurate picture of your true monthly housing cost.

Down payment size directly impacts your monthly payment and total interest. Putting down less than 20% typically requires private mortgage insurance (PMI), adding to your monthly cost.