What will my monthly mortgage payment be?
A monthly mortgage payment is principal and interest on the loan, plus one-twelfth of the yearly property taxes and homeowners insurance, plus mortgage insurance and HOA dues when you have them. On a $400,000 home with 20% down at a 6.5% example rate over 30 years, principal and interest are $2,022.62 a month, and the full payment is $2,422.62 with $3,000 a year in taxes and $1,800 in insurance.
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Monthly payment
$2,422.62
- Principal and interest
- $2,022.62
- Property taxes
- $250.00
- Homeowners insurance
- $150.00
- HOA dues
- $0.00
- Mortgage insurance
- $0.00
- Total each month
- $2,422.62
- Loan amount
- $320,000
- Interest over 30 years
- $408,142
A worked example
A $400,000 price with 20% down ($80,000) leaves a loan of $320,000. At 6.5% over 30 years that is $2,022.62 a month in principal and interest. Taxes of $3,000 a year add $250.00 a month, and insurance of $1,800 a year adds $150.00. The total is $2,422.62 a month.
Over all 30 years, that loan pays $408,142 in interest on top of the $320,000 borrowed.
How principal and interest are worked out
It is the standard amortization formula: payment = loan × r ÷ (1 − (1 + r)−n), where r is the yearly rate divided by 12 and n is the number of monthly payments. Each payment is the same, but early payments are mostly interest and later ones mostly principal. To see how a payment fits your income, the Debt Ratio tool works it through.
Questions people ask
What is included in a monthly mortgage payment?
Principal and interest on the loan, plus property taxes and homeowners insurance, and mortgage insurance when the loan has it. Taxes and insurance are often collected with the payment and held in an escrow account that pays those bills when they come due. HOA dues are usually paid to the association, not the lender, but they are part of what the home costs each month, so the calculator adds them in.
How much does the interest rate change the payment?
A higher rate raises principal and interest for the whole life of a fixed-rate loan, and the bigger the loan, the bigger the change. Try it in the calculator by changing only the rate. On a $320,000 loan over 30 years, principal and interest are $2,022.62 a month at 6.5% and $2,237.49 at 7.5%. One percentage point moves the payment by $214.87 a month on that loan.
How much higher is a 15-year payment than a 30-year?
The 15-year payment is higher because the loan is repaid in half the time, but far less interest is paid over its life. At the same 6.5% example rate on $320,000, principal and interest are $2,787.54 a month over 15 years and $2,022.62 over 30. The 15-year loan costs $181,758 in interest over its life; the 30-year costs $408,142.
Does this include mortgage insurance?
Only when you enter it. A conventional loan with less than 20% down carries mortgage insurance, and an FHA loan carries an annual mortgage insurance premium whatever the down payment. The premium depends on the loan, so the figure to enter is the one on your quote.
Why is the payment on my Loan Estimate different?
The Loan Estimate uses your actual rate, the tax figure for that property, an insurance estimate and any mortgage insurance on your loan. Change those boxes here to match it and the two should agree on principal and interest.
Your next step
See rate options for your own loan in Rate & Best Fit
You can call me at (843) 765-0000 or schedule an appointment when you are ready or if you have questions.
Educational information, not a loan approval or commitment to lend. A calculator works out what you type into it; it does not approve or deny anyone, and your own figures come from your Loan Estimate. Jeff Moran, NMLS #483943, through C2 Financial Corporation, NMLS #135622. Equal Housing Opportunity.