Mortgage Payments Explained: PITI and Beyond
When people talk about a mortgage payment, they often mean only principal and interest. In practice, your monthly housing cost usually includes several other items, often summarised as PITI: principal, interest, taxes and insurance. Depending on your situation, private mortgage insurance and association fees can be added too. This calculator puts all of them together so the number you see is closer to what will actually leave your account.
The parts of a mortgage payment
- Principal and interest – repays the loan using the standard amortization formula.
- Property tax – set by local authorities, commonly expressed as a percentage of the home's value each year.
- Homeowners insurance – protects the property and is usually required by the lender.
- PMI – private mortgage insurance, often required when the down payment is under 20%.
- HOA or maintenance fees – charged by some buildings or communities.
Choosing a loan term
A 30-year term gives the lowest monthly payment and is the most common choice. A 15-year term has a higher payment, but rates are often lower and the total interest can be less than half. Switch the loan term above and compare the "Total interest over term" figure.
Avoiding or removing PMI
PMI protects the lender, not you, so it is worth minimising. Putting down 20% or more usually avoids it entirely. If you do pay PMI, it can often be cancelled once your balance drops to around 80% of the home's original value, either through regular payments, extra principal payments or a rise in the home's value.
How much house can you afford?
A common guideline is to keep total housing costs to a reasonable share of your gross income and total debts within lender limits. Use this calculator to test different prices and down payments, and our loan eligibility calculator to check the borrowing side.