Formula
The loan is the home price minus the down payment. Principal and interest use the standard fixed-rate payment. Tax and insurance are annual amounts divided by 12:
Monthly payment = principal and interest + annual tax / 12 + annual insurance / 12
HOA dues, mortgage insurance, and repairs are not added.
Assumptions
- The rate and the tax and insurance amounts stay fixed.
- Tax and insurance are spread evenly across 12 months.
- The down payment is cash and is not borrowed.
Worked example
A $400,000.00 home with $80,000.00 down, at 6.5% for 30 years, has a housing payment of $2,572.62, including $400.00 tax and $150.00 insurance.
Input definitions
- Down payment
- Cash paid at purchase. It reduces the amount borrowed.
- PITI
- Principal, interest, taxes, and insurance, shown here as one monthly total.
Limitations
This is an estimate, not a mortgage offer. Lenders may require mortgage insurance, escrow cushions, or a different tax bill than the annual amount you enter.
Questions
Does this include private mortgage insurance?
No. Add that cost yourself if a lender requires it. This payment includes only principal, interest, the tax you enter, and the insurance you enter.
Can the down payment be zero?
Yes. The full home price is then borrowed.