US Mortgage Calculator — PITI, PMI & Amortization

What does this calculator do?

This calculator answers the four most common questions a US homebuyer asks during the search-to-close phase, all on one page, with no account and no email capture:

1. What is my full monthly payment? PITI breakdown — Principal + Interest, Property Tax, Homeowners Insurance, PMI and HOA — for any home price, down payment, rate and term.
2. What home price can I afford? The classic 28/36 DTI rule applied honestly. The result shows both the housing-only ceiling and the total-debt ceiling, with the binding rule labelled explicitly.
3. When does a refinance pay off? Closing costs divided by monthly savings, returned as the smallest integer month count at which cumulative savings catch up to the up-front cost.
4. How fast can extra principal payments retire the loan? Amortization mode with an optional monthly extra-principal input. The savings call-out shows the lifetime interest difference and the months shaved off the term.

Everything runs in your browser. No PII is sent to a server. No rate-quote API is called. No ZIP code is captured. The calculator is intentionally a pure-math educational tool that complements — but does not replace — a conversation with a licensed lender.

Disclaimer: Estimate only. Not financial or mortgage advice. Consult a licensed lender for any decision-quality calculation.

How is a US mortgage payment actually built?

A US mortgage payment has four moving parts, traditionally summarized as PITI:

• Principal: the portion of each payment that reduces the loan balance.
• Interest: the portion that goes to the lender as compensation for the time-value of money.
• Taxes: county property taxes, escrowed monthly into a separate account that the lender forwards to the county once or twice a year.
• Insurance: a homeowners insurance policy (sometimes called hazard insurance), also escrowed.

Two additional fees are common in modern US loans:

• PMI (Private Mortgage Insurance): added when the loan-to-value ratio exceeds 80 percent at origination. It protects the lender, not the borrower, against default loss. Typical cost is 0.5 to 1.5 percent of the loan amount per year, paid monthly.
• HOA (Homeowners Association fee): a monthly fee paid to a property’s homeowners association, common in condos, townhomes and planned-unit developments. Ranges from 100 dollars to over 1,000 dollars per month depending on the property.

The principal-and-interest portion is calculated with the standard fixed-rate annuity formula:

M = P × (r × (1+r)^n) / ((1+r)^n − 1)

where P is the loan amount, r is the monthly rate (annual rate ÷ 12 ÷ 100), and n is the total number of monthly payments (term years × 12). For a 300,000-dollar / 30-year / 6.5 percent loan, this formula returns approximately 1,896.20 dollars per month. Add 500 dollars of monthly property tax (6,000 / 12), 125 dollars of monthly insurance (1,500 / 12), and the total monthly outflow lands near 2,521 dollars — about 33 percent more than the bare loan payment. This gap is the most common surprise for first-time US buyers.

How does the PMI drop-off rule work?

PMI is one of the most expensive line items a US borrower never wanted. On a 300,000-dollar loan it typically costs 150 to 250 dollars per month. The good news is that federal law caps how long the borrower has to pay it.

The Homeowners Protection Act of 1998 (12 USC § 4901 ff.) creates two cancellation milestones:

• Automatic termination at 78 % LTV. Once the loan balance — based on the original amortization schedule, not appraised market value — falls to 78 percent or below of the original property value, the lender MUST cancel PMI automatically, assuming the borrower is current on the loan. The borrower does not need to ask.
• Borrower-requested cancellation at 80 % LTV. At 80 percent LTV (using either the original amortization schedule or current market value with a new appraisal) the borrower may submit a written request to cancel. The lender will require a clean payment history and may require an appraisal, but it cannot refuse a qualifying request.

This calculator marks both milestones in the LTV line of the payment breakdown. On a typical 95 % LTV first-time-buyer scenario at 6.5 percent / 30 years, the borrower-requested 80 % LTV milestone arrives around month 105 and the automatic 78 % LTV milestone around month 121 — roughly 10 years of PMI payments totalling 18,000 dollars or more at 150 dollars per month.

Two important details. FHA loans use Mortgage Insurance Premium (MIP), which has different cancellation rules: it generally lasts the life of the loan unless the borrower puts more than 10 percent down. And lender-paid mortgage insurance (LPMI), an alternative where the lender absorbs PMI in exchange for a higher rate, is not cancellable — the rate increase persists for the life of the loan. Both edge cases require lender confirmation.

Authority reference. The federal text and consumer guidance live on the Consumer Financial Protection Bureau website and on Wikipedia’s mortgage-loan article.

How does the 28/36 affordability rule work?

The 28/36 rule is the conservative starting point most financial advisors use to translate income into a maximum home price. Two ratios:

• 28 % housing ratio. Monthly housing cost (P+I, property tax, insurance, HOA) should not exceed 28 percent of gross monthly income.
• 36 % total-debt ratio. Monthly housing cost plus all other monthly debt obligations (auto loans, student loans, minimum credit card payments, child support, etc.) should not exceed 36 percent of gross monthly income.

The lower of the two binding constraints determines the maximum home price. The affordability mode of this calculator computes both, labels the binding rule, and shows the monthly budget consistent with that rule.

A 100,000-dollar annual income gross is 8,333 dollars monthly. The 28 % housing ceiling is 2,333 dollars per month; the 36 % total-debt ceiling is 3,000 dollars minus other monthly debts. If the borrower has 300 dollars of monthly student-loan and auto-loan payments, the total-debt ceiling is 2,700 dollars — and the binding rule is housing-only at 2,333 dollars. If other debts are 1,200 dollars, the total-debt ceiling drops to 1,800 dollars and now binds before the housing rule. Mortgage lenders frequently allow ratios above 36 percent (43 percent for conforming loans, 50 percent for FHA loans), but the 28/36 rule is the version that produces a comfortable monthly budget rather than the maximum mathematical approval.

Three caveats worth internalizing before buying at the lender’s maximum. First, your gross income is not what you take home — federal, state and FICA taxes typically reduce it by 25 to 35 percent. Second, the 28/36 numerator excludes irregular expenses such as repairs, replacement reserves, and rising property taxes. Third, the rule assumes a stable two-paycheck household; for variable-income earners the conservative cushion matters more.

How does the refinance break-even calculation work?

Refinancing replaces the existing loan with a new loan, usually at a lower rate, plus the borrower pays closing costs (typically 2 to 5 percent of the new loan amount: lender fees, title insurance, recording fees, attorney fees in some states). The refinance only makes financial sense if the borrower stays in the home long enough for the lower monthly payment to recoup the up-front costs.

The math is straightforward:

break-even months = closing costs ÷ monthly savings

Where monthly savings = old monthly payment − new monthly payment.

Worked example: a 300,000-dollar balance at 7 percent has a monthly P+I of approximately 1,996 dollars; refinancing to 5.5 percent on a fresh 30-year produces about 1,703 dollars per month — savings of 293 dollars per month. With 6,000 dollars in closing costs, break-even is 6,000 / 293 ≈ 20.5, rounded up to 21 months. If you plan to stay in the home for at least 21 more months, the refinance pays off. If you might sell, transfer or refinance again before then, the closing costs are sunk.

Two cautions. First, “no-closing-cost refinance” usually means the closing costs are rolled into the new loan balance (which extends the amortization) or into a higher rate (which delays the break-even). Run the math both ways. Second, resetting a 25-year-old loan back to 30 years lowers the monthly payment but increases the lifetime interest paid even if the rate is lower — only the rate-adjusted comparison answers the right question.

The refinance mode of this calculator returns three numbers: new monthly payment, monthly savings, and break-even months. If the new payment is equal to or higher than the current payment, the calculator surfaces an honest “no savings” message rather than a misleading “0 months” result.

How do extra principal payments compound?

Every dollar of extra principal paid this month avoids interest charges on that dollar for every remaining month of the loan. On a 300,000-dollar / 30-year / 6.5 percent loan, that single extra dollar at month 1 saves the borrower roughly 6.5% × 30 × 1 / 12 = 16.25 cents per month over 360 months — a 58.50-dollar total saving over the loan’s life. The same dollar paid in month 350 saves only pennies. This is why extra-principal payments concentrated early are dramatically more powerful than the same dollars paid late.

Three rough rules of thumb for a 30-year fixed:

• An extra 100 dollars per month shortens the term by approximately 4 to 5 years and saves 50,000 to 70,000 dollars in lifetime interest, depending on rate and balance.
• An extra 500 dollars per month shortens the term by approximately 11 to 13 years and saves 150,000 to 200,000 dollars in lifetime interest.
• A single extra full payment per year (often called “bi-weekly payment schedule”) shortens the term by approximately 4 to 5 years on a 30-year loan.

The amortization mode of this calculator lets you see the exact effect. Enter an extra-principal-monthly value and the table re-builds — fewer rows, lower last row, smaller interest total. The savings call-out shows the difference against the no-extra baseline.

Before paying extra principal, three sanity checks. First, confirm your loan has no prepayment penalty (most modern US conventional loans do not). Second, weigh extra principal against fully matching employer 401(k) contributions (often a 50–100 percent immediate return on the matched portion) and against paying off high-interest credit card balances (often 18 percent+ APR). Third, build an emergency fund — extra principal sent to the lender is not retrievable in a crunch, while the same dollars in a high-yield savings account are.

What is the difference between a US mortgage and other mortgage systems?

For European, Asian or Latin-American investors evaluating US real estate, three structural differences from typical home-country mortgages matter most:

Fixed-rate term length. In the US, the most common term is the 30-year fixed: a single rate for the entire life of the loan. In Germany, by contrast, the typical Hypothek fixes the rate for 5, 10 or 15 years, after which the borrower negotiates an Anschlussfinanzierung at the prevailing market rate (Zinsbindungsfrist). In the UK and Australia, variable or two-to-five-year fixed rates dominate. The US system shifts interest-rate risk from the borrower to the lender (or, for securitized loans, to the bond market), which is a feature US borrowers tend to undervalue until rates rise.

Tax treatment of mortgage interest. US homeowners may deduct interest on up to 750,000 dollars of acquisition debt on a primary residence (and a second home under certain conditions), subject to the broader limits of the Tax Cuts and Jobs Act of 2017. Germany has no equivalent for owner-occupied residences (Schuldzinsenabzug applies only to investment property). The deduction is a meaningful incentive that does not exist in most European tax systems.

Recourse vs non-recourse. Twelve US states (notably California, Arizona, Oregon, Washington, Texas for purchase-money loans) treat most home mortgages as non-recourse: if the borrower defaults, the lender’s remedy is limited to the property itself, not the borrower’s other assets. Other states allow the lender to pursue the deficiency after a foreclosure sale. This jurisdictional variability is a major reason why “the US system” is not really a single system.

For German investors specifically, a typical comparison sequence runs: gross rental yield → US property tax → US insurance + HOA → reserve for vacancy + repairs → mortgage interest deductibility → currency-risk hedging cost. Always engage a US-licensed real-estate attorney, a CPA familiar with non-resident-alien tax treaties, and your home-country financial advisor before signing.

Disclaimer. Estimate only. Not financial, tax or legal advice. Consult licensed professionals before any decision.

Which loan terms does this calculator support?

The four terms covered by the loan-term dropdown:

• 15-year fixed. The aggressive-payoff term. Higher monthly payment, dramatically lower lifetime interest. Suits borrowers with strong cash flow who want the loan retired before retirement age.
• 20-year fixed. A compromise term, common at credit unions but less standard in the conforming market. Lower monthly than 15-year, lower interest than 30-year.
• 30-year fixed. The default US loan. Lower monthly payment, more flexible budget, but roughly twice the total interest of a 15-year. Best for borrowers who will reliably invest the monthly-payment difference at a return exceeding the after-tax mortgage rate.
• 40-year fixed. A non-QM product used to qualify borrowers at a lower monthly payment. Higher lifetime interest, slower equity building, less common than the other three.

ARM (Adjustable-Rate Mortgages) are intentionally excluded from this version. ARM mathematics requires modeling rate-cap structures, lifetime-cap structures and reset periods — a separate tool category.

What this calculator does not do

To stay reliable rather than do everything badly, this calculator intentionally skips several adjacent features:

• It does not predict your interest rate. Rates depend on credit score, debt-to-income ratio, down payment, loan amount, occupancy, property type and current market conditions. Get a quote from a licensed lender for the rate you would actually receive.
• It does not estimate your property tax. Property tax is determined by your county assessor and varies by location, exemptions and assessment cycle. Use county-published rates or check the actual tax bill if available.
• It does not estimate your insurance premium. Get a quote from a licensed insurance agent for the property you are considering — premiums vary by location, construction type, claims history and coverage selection.
• It does not capture lender fees, origination points, discount points or other loan-specific costs. Those are best modelled against an actual Loan Estimate disclosure.
• It does not compare ARM products, interest-only products, or non-amortizing loans. The math assumes a fully-amortizing fixed-rate loan.

Everything inside the calculator’s scope (PITI breakdown, PMI drop-off, affordability ceiling, refinance break-even, amortization with extra principal) is verifiable arithmetic. Everything outside that scope is properly the job of a licensed lender, a licensed insurance agent, and a county tax assessor.

What does the final disclaimer say?

This is an estimation tool for educational purposes only. The numbers it returns are not financial advice, not mortgage advice, not tax advice, and not legal advice. They are starting points for conversations with the professionals who actually advise you. Before signing any mortgage document, get the relevant numbers from a licensed lender, a licensed insurance agent, and (for tax-related questions) a CPA. The Consumer Financial Protection Bureau has free comparison-shopping tools at consumerfinance.gov and a sample Loan Estimate that shows what real lender disclosure looks like.