Understanding Your Mortgage Payment

Principal & Interest: This is the core of your payment. Principal pays down your loan balance, while interest is the cost of borrowing money. In the early years, most of your payment goes toward interest due to amortization.

What is PMI?

If your down payment is less than 20% of the home price, lenders usually require Private Mortgage Insurance (PMI). This protects the lender if you default. Our calculator automatically estimates PMI if applicable. PMI typically costs 0.5% to 1% of the loan amount annually.

Taxes & Insurance

Property taxes and homeowners insurance are often bundled into your monthly payment through an escrow account. These costs can vary significantly by location and property value.

Loan Types Explained

Fixed Rate Mortgage: Interest rate remains constant throughout the loan term. Adjustable Rate Mortgage (ARM): Interest rate adjusts periodically after an initial fixed period. FHA Loans: Government-backed loans with lower down payment requirements. VA Loans: For veterans with no down payment required.