Mortgage Calculator — Estimate Your Monthly Payment

Understanding how your monthly mortgage payment is calculated is key to managing your home purchase budget. The complete payment is often referred to as PITI, which represents the four core components:

• Principal: The portion of your payment that directly reduces the remaining balance of your loan each month.
• Interest: The cost of borrowing the money, calculated monthly based on your remaining principal balance.
• Taxes: Local property taxes are typically collected monthly via an escrow account and paid annually to your local government. Property tax rates vary significantly by location—ranging from under 0.5% annually in Denver, CO, to over 2% in Chicago, IL.
• Insurance: This includes homeowners insurance (required by lenders to protect the property) and Private Mortgage Insurance (PMI), which is usually required if your down payment is less than 20%.

The standard formula used to calculate the principal and interest (P&I) portion of your payment is:

Where:

• P: Loan amount (Principal)
• r: Monthly interest rate (Annual interest rate / 12)
• n: Total number of payments (Loan term in years × 12)

For example, on a $400,000 loan with a 6.5% rate and a 30-year term:

• r = 0.065 / 12 = 0.00542
• n = 360 payments
• Monthly P&I = approximately $2,528/month

The calculator above handles this automatically — enter your loan details to see your full PITI breakdown instantly.

Amortization refers to the process of paying off a loan over time through a structured schedule of equal payments. In the early stages of a mortgage, your payments are heavily weighted toward interest, while only a small portion goes toward reducing the principal balance. This is because interest is calculated on your remaining loan balance, which is at its highest point when the loan begins.

As you gradually pay down the principal, the outstanding balance decreases, which in turn reduces the interest charged for the next period. Consequently, with each passing year, a larger portion of your fixed monthly payment goes toward principal and a smaller portion toward interest.

For example, on a $400,000 30-year loan at 6.5%, your first monthly payment of ~$2,528 is split roughly $2,167 interest and $361 principal. By year 20, this dynamic has substantially reversed—more of your monthly payment goes toward the principal rather than interest.

Because of how amortization works, making extra payments directly toward your principal in the early years yields the greatest interest savings over the life of the loan. Even adding $100 extra to your payment each month early on can reduce your total interest by thousands of dollars and shave years off your term.

See your full month-by-month payment breakdown using our Amortization Calculator.

Current Mortgage Rate Context

As of June 2026, the average 30-year fixed mortgage rate in the US is approximately 6.65%, and the 15-year fixed average is approximately 5.89%. Rates are determined by your credit score, down payment, loan type, and the lender — use the calculator above with your actual quoted rate for the most accurate monthly payment estimate.

Rate data as of June 2026

Tips for Lowering Your Monthly Mortgage Payment

1. Make a larger down payment — reduces the initial loan principal and can eliminate the need for costly Private Mortgage Insurance (PMI).
2. Improve your credit score before applying — even a modest 20-point improvement can qualify you for a lower interest rate bracket, saving you money monthly.
3. Shop multiple lenders — interest rates and fees can vary by 0.25% to 0.5% or more among lenders for the exact same borrower.
4. Choose a longer loan term — opting for a 30-year term keeps your monthly payment lower than a 15-year term, though you will pay more total interest over time.
5. Ask about PMI removal once you reach 20% equity — once you have paid down your loan balance to 80% of the home's value, request cancellation since removal is not always automatic.
6. Make extra principal payments early — maximizes interest savings over the loan's life. Use our Amortization Calculator to model and visualize your savings.