Mortgage Calculator
Calculate your monthly mortgage payment, total interest, and loan costs with US standard amortization. Get detailed payment breakdown including principal, interest, taxes, and insurance (PITI).
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Mortgage Tips
Current Market Context
Understanding US Mortgage Calculations
Equal Monthly Payment Algorithm
US mortgages use the standard amortization formula with monthly compounding: M = P × [r(1+r)^n] / [(1+r)^n - 1]. This creates equal monthly payments where early payments are mostly interest, and later payments are mostly principal. This differs from some international systems that use different compounding frequencies.
PITI Payment Structure
Principal: Amount reducing loan balance
Interest: Cost of borrowing (decreases over time)
Taxes: Annual property tax ÷ 12
Insurance: Homeowners + PMI (if LTV > 80%)
PMI and LTV Considerations
Private Mortgage Insurance (PMI) is required when your down payment is less than 20% (LTV > 80%). PMI typically costs 0.3% - 1.5% annually of the loan amount. It can be removed once you reach 20% equity, making larger down payments financially beneficial beyond just reducing the loan amount.
Frequently Asked Questions
What's the difference between interest rate and APR?
Interest rate is the cost of borrowing the principal, while APR (Annual Percentage Rate) includes additional costs like origination fees, discount points, and other charges. APR gives you a more complete picture of the loan's total cost.
Should I choose a 15-year or 30-year mortgage?
15-year mortgages have higher monthly payments but lower total interest costs and faster equity building. 30-year mortgages offer lower monthly payments and more cash flow flexibility, but higher total interest costs. Choose based on your budget and financial goals.
When does PMI get removed automatically?
By law, PMI must be automatically removed when your loan balance reaches 78% of the original home value, provided you're current on payments. You can request removal at 80% LTV, or sooner if your home has appreciated significantly.
How accurate are online mortgage calculators?
Online calculators provide accurate estimates for principal and interest using standard formulas. However, actual rates depend on credit score, debt-to-income ratio, market conditions, and lender-specific factors. Always get pre-approval for precise terms.