- PITI
- Principal, interest, taxes and insurance: the four main parts of a monthly mortgage payment. This calculator adds monthly principal and interest, property tax, homeowners insurance and, when the down payment is under 20%, PMI to show the total monthly payment. Taxes and insurance are usually collected through escrow.
- Principal and interest
- The part of the monthly payment that repays the loan and covers interest, calculated from the loan amount, rate and term. It stays fixed for the life of a fixed-rate mortgage, while taxes, insurance and PMI can change. Early on, most of it is interest.
- Down payment
- The cash paid toward the purchase price at closing; the rest becomes the loan amount. In this calculator it is entered as a dollar amount. A down payment under 20% of the price triggers PMI here, and a larger one lowers the loan, the monthly payment and total interest.
- PMI (private mortgage insurance)
- Insurance that protects the lender on a conventional loan when the down payment is under 20%. It is charged as a yearly percentage of the loan and added to the monthly payment. Under the Homeowners Protection Act, it can be cancelled on request at 80% of the original value and ends automatically at 78%.
- Property tax
- An annual tax charged by local governments based on the assessed value of the home. This calculator applies your rate to the home price and divides by 12 to get the monthly amount. Actual bills depend on the local assessment and can rise over time, which changes the escrow portion of the payment.
- Homeowners insurance
- A policy covering damage to the home and liability for injuries on the property. Mortgage lenders require it and usually collect the premium monthly through escrow. The calculator divides your yearly premium by 12 and adds it to the payment; flood or earthquake coverage is usually separate.
- Interest rate
- The annual percentage the lender charges on the unpaid balance, not including fees. This calculator divides it by 12 to get the monthly rate for the payment formula. A small change in the rate moves the monthly payment and, over a long term, the total interest by a noticeable amount.
- Loan term
- The number of years over which the loan is scheduled to be repaid in equal monthly payments. A longer term lowers each payment but keeps the balance outstanding longer, so total interest rises. A shorter term means higher payments and less interest over the life of the loan.
- Total interest
- The sum of all interest paid over the full term if the loan runs to maturity with regular payments: total principal and interest payments minus the loan amount. On a 30-year loan it can approach or exceed the amount borrowed. Extra payments or refinancing would change it.
- Amortization
- Paying off a loan through equal periodic payments that cover interest first and then principal. Because interest is charged on the remaining balance, early payments are mostly interest and later payments mostly principal. The calculator uses the standard amortization formula to find the principal and interest payment.
