PITI: the four components of a mortgage payment
A mortgage payment consists of four parts: Principal (repaying the loan amount), Interest (cost of borrowing), Taxes (property tax, typically 1-2% of home value annually), and Insurance (homeowner's insurance and PMI if down payment <20%). Our calculator breaks down each component and shows how they combine into your total monthly payment. Many online calculators show only P&I, but PITI is the true cost of homeownership and what lenders use for debt-to-income ratio qualification.
PMI (Private Mortgage Insurance) is required when the down payment is less than 20% of the home value. PMI rates range from 0.5% to 1.5% of the loan amount annually. Our calculator factors in PMI and shows when it drops off (automatically at 78% loan-to-value, or at 80% if you request cancellation). Factoring PMI into your budget can mean the difference between qualifying for a loan and being denied.
Comparing mortgage scenarios
The calculator lets you compare up to three scenarios side by side: different down payment amounts, interest rates, or loan terms (e.g., 30-year fixed vs 15-year fixed vs 5/1 ARM). The 15-year mortgage has higher monthly payments but saves significantly in total interest because less interest accrues over the shorter term. However, the 30-year offers flexibility — you can always make extra principal payments to accelerate the payoff while preserving the lower minimum payment as a safety net.
Our calculator also models the impact of discount points (prepaid interest that reduces the rate). One point costs 1% of the loan amount and typically reduces the rate by 0.25%. The break-even period is the time required for the monthly savings to exceed the points paid. If you plan to stay in the home past the break-even point, buying points makes financial sense.