Accounting GnomeWhat goes into a mortgage payment?
Your monthly payment is usually more than just the loan — lenders bundle four things, known as PITI:
- Principal — the portion that pays down your loan balance.
- Interest — the cost of borrowing.
- Taxes — property taxes, usually collected monthly into escrow.
- Insurance — homeowners insurance (and PMI if your down payment is under 20%).
HOA dues, where they apply, are paid separately but are part of your true monthly cost — so we include them here.
How principal & interest is calculated
P&I = Loan × i ÷ (1 − (1 + i)⁻ⁿ)
Where the loan is the home price minus your down payment, i is the monthly rate (annual ÷ 12), and n is the number of monthly payments.
A note on PMI
If your down payment is below 20% of the home price, lenders typically require private mortgage insurance (PMI). Enter an estimate above; once you reach ~20% equity you can usually request its removal.