How to Calculate Your Monthly Mortgage Payment

Mortgage 101
Understand the three main components of a mortgage payment, including PITI, down payment, and PMI, to ensure that your monthly payments fit within your budget. Get expert tips and advice to help you navigate the home buying process and make informed decisions about your investment.
Published on
July 27, 2023
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Buying a home is one of the biggest investments you'll make in your life. With homeownership comes the responsibility of making mortgage payments each month. If you're in the market for a new home, you need to know how to calculate your mortgage payment to ensure that it fits within your budget. In this blog post, we'll discuss the three main components of a mortgage payment: PITI, down payment, and PMI.


PITI stands for Principal, Interest, Taxes, and Insurance. These four components make up the majority of your mortgage payment.

  • Principal: This is the amount of money you borrow from the lender to buy your home.
  • Interest: This is the amount of money the lender charges you for borrowing the principal amount.
  • Taxes: Property taxes are based on the assessed value of your home and vary depending on where you live.
  • Insurance: Homeowner's insurance protects your home and personal belongings from damage or loss.

To calculate your monthly PITI payment, you need to add up the principal, interest, taxes, and insurance and divide by the number of months in the loan term.

Down Payment:

A down payment is a percentage of the purchase price of the home that you pay upfront. The down payment reduces the amount of money you need to borrow, which can lower your monthly mortgage payment. The size of the down payment you'll need depends on the type of mortgage you have and your lender's requirements. Typically, down payments range from 3% to 20% of the purchase price of the home.


If you put down less than 20% of the purchase price of the home, your lender may require you to pay Private Mortgage Insurance (PMI). PMI protects the lender in case you default on your loan. PMI typically costs between 0.3% and 1.5% of the original loan amount per year. The cost of PMI is added to your monthly mortgage payment until you reach 20% equity in your home.

To calculate your monthly mortgage payment, you can use an online mortgage calculator or a spreadsheet. Plug in your loan amount, interest rate, loan term, and down payment to get an estimate of your monthly mortgage payment. Don't forget to factor in PMI if you're putting down less than 20%.


In conclusion, calculating your mortgage payment is a crucial step in the home buying process. Make sure to factor in PITI, down payment, and PMI to get an accurate estimate of your monthly payment. By knowing what you can afford, you'll be able to find the right home and avoid any financial stress down the road.

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