How to calculate a mortgage payment with taxes and insurance
Take the mortgage in the answer above: a $400,000 home with $80,000 down leaves $320,000 to borrow, at 7.40% a year over 360 monthly payments.
- Divide the annual rate by twelve to get the rate for one month. It does not come out exactly, so the figure below is rounded; the calculator keeps the exact twelfth. 7.40% ÷ 12 ≈ 0.6167% a month
- Put it into the standard loan payment formula, where P is the amount borrowed, r the monthly rate and n the number of monthly payments. P × r ÷ (1 − (1 + r)^−n) = $320,000 × 0.6167% ÷ (1 − (1 + 0.6167%)^−360) = $2,215.62
- This calculator rounds each month's interest to two decimal places and uses the smallest payment that brings the balance to exactly zero after 360 payments. Here that is the same figure: $2,215.62 a month.
- In the first month the interest is the balance times the annual rate, divided by twelve and rounded to two decimal places, and the rest of the payment repays the loan. $320,000 × 7.40% ÷ 12 = $1,973.33 interest $2,215.62 − $1,973.33 = $242.29 repaid $319,757.71 still owed
- Every month repeats that on a smaller balance, and the last payment, $2,209.47, only clears what is left. Over 360 payments you pay $797,617.05 in all, and everything above the amount borrowed is interest. $797,617.05 − $320,000 = $477,617.05 interest
- Property tax and home insurance would go on top, each yearly bill divided by twelve, along with any monthly association fee. None is entered above, so here the monthly payment is the principal and interest alone.
That is the monthly payment of $2,215.62 in the answer above, and the $477,617.05 of interest the loan costs over its life.
The payment is not the loan
Ask what a mortgage costs and most calculators answer with principal and interest. That is the payment on the debt, and for a great many buyers it is well short of what actually leaves the account. Property tax, home insurance, any association fee and, on a thin deposit, mortgage insurance are all part of the bill, and all four are usually collected by the lender alongside the loan payment rather than sent separately.
This page adds them up. The headline figure is the first month in full, and the bar underneath splits it so you can see how much of it is repaying anything at all. On a new thirty-year loan the answer is sobering: the slice that reduces the balance is the smallest one on the bar.
Why we do not fill in your property tax
The interest rate on this page arrives filled in, from a weekly survey published under a government charter, with the week it describes printed underneath. Property tax and home insurance do not, and that is a deliberate gap rather than an oversight.
Property tax is set county by county, sometimes district by district within a county. The Census Bureau does publish median real estate taxes paid down to county level, which is the right source and the one we would use, but its bulk files and its data API are both closed to automated access without a registered key, so we do not have it yet. Home insurance has no equivalent source at all: premiums are priced property by property, and a national average would be wrong for almost everybody who read it. Filling either field with a plausible-looking number and attaching a source label to it would be the one kind of error worth avoiding above all others, so both fields start empty and wait for the figure on your own bill.
Mortgage insurance ends on a date, and it is not the date you expect
Put down less than a fifth of the price on a conventional loan and the lender will require mortgage insurance. It protects the lender, not you, and it comes off eventually. When it comes off is governed by statute, and the statute contains a trap that almost every calculator gets wrong.
Automatic termination happens when the balance reaches seventy-eight per cent of the original price on the schedule the loan started with. The law says this explicitly: it applies irrespective of what the balance actually is on that date. Pay an extra amount every month for five years and you will be well under the threshold long before the date arrives, and the insurance will keep being charged anyway.
What paying extra does move is the other date. Once the real balance reaches eighty per cent you may ask to have the insurance cancelled, subject to being up to date on payments, having no second lien and the property not having lost value. That request has to be made; nothing happens on its own. When both dates apply to your loan, the page shows both and says which is which. There is also a backstop: the insurance may not be charged past the midpoint of the loan term whatever the balance has done, which is the rule that binds on a high rate with a very small deposit.
Common questions
What is a conforming loan limit and why does the page mention it?
Fannie Mae and Freddie Mac will only buy mortgages up to a limit set each November for the following calendar year. A loan above the limit for the county the property is in is a jumbo loan: it is funded differently, underwritten more strictly and priced separately. The page carries the baseline limit that applies in most counties and the highest limit any county reaches, both read out of the agency's own county list, so you can see which side of the line a loan falls.
Why is the escrow total lower than I expected over thirty years?
Because property tax, insurance and association fees do not stop when the loan does. The totals on this page cover the years the loan runs and nothing beyond, since that is the only period the loan makes them comparable over. Owning the house for a further twenty years means twenty more years of all three.
Does the extra payment field save mortgage insurance too?
Only in one case: when the extra payments clear the loan entirely before the automatic termination date arrives. Otherwise the premiums run to the date the original schedule set, for the reason above. The page separates the interest saved from the insurance saved rather than adding them together, because they behave differently.
Is this an APR?
No. The rate here is the nominal rate, the one that generates interest on the balance. The annual percentage rate a United States lender must quote alongside it folds in points, origination fees and certain closing costs, so it is higher whenever any of those exist. This page does not ask about fees and therefore cannot compute one. Use it to understand the shape of a loan; use the lender's own disclosure to compare offers.
Is anything I type stored?
No. The calculation runs on our server from the values in the address bar, nothing is written down, and the access log for this site drops the query string precisely so that the numbers you enter are never recorded.
Sources
The rate filled in above comes from a weekly government-sponsored survey, and the two mortgage insurance dates come from the statute that sets them.
How the payment is worked out
The loan is repaid by a level monthly instalment, worked out on an integer schedule rather than a formula so every row adds up and the balance lands exactly on zero. Interest for a month is the balance times the yearly rate divided by twelve, rounded to the cent in a single step. Property tax and home insurance are yearly amounts split into twelve equal parts; the association fee is already monthly. Mortgage insurance is the yearly rate on the amount originally borrowed, divided by twelve the same way interest is.
It prices a loan from the nominal rate alone, so it is not an APR: a lender folds fees, points and insurance into that figure and the payment they quote can differ.
What the payment leaves out:
- adjustable and variable rates
- discount points paid to buy the rate down
- closing costs, title insurance and recording fees
- prepayment penalties
- any income tax deduction for mortgage interest
- FHA and VA insurance premiums, which have their own schedules
- the cushion a servicer collects and the yearly escrow adjustment