Calculate monthly mortgage payments, interest breakdown, taxes, insurance, and full amortization schedule.
Where M is total monthly mortgage payment, P is the loan principal amount, r is the monthly interest rate (annual rate / 12), and n is total number of monthly payments (years * 12).
A standard fixed-rate mortgage splits each monthly installment between reducing the principal debt balance and paying off accrued interest. In the early years of a 30-year loan, the vast majority of each payment covers interest charges. As the principal drops, interest decreases and principal repayment accelerates.
Lenders evaluate your total housing debt using the PITI metric: Principal, Interest, Taxes, and Insurance. When applicable, HOA dues and Private Mortgage Insurance (PMI) are added to calculate your qualifying Debt-to-Income (DTI) ratio.
$400,000 purchase price, 20% down ($80k), 30-year fixed at 6.75%.
Result: $2,546 / month
$500,000 purchase with 25% down at 6.0% interest to build rapid equity.
Result: $3,835 / month
The 28/36 rule suggests that a household should spend no more than 28% of its gross monthly income on housing costs (PITI) and no more than 36% on total debt service (housing + auto loans + student debt + credit cards).
Under the federal Homeowners Protection Act, borrowers can request cancellation of PMI once their loan principal balance reaches 80% of the original home value, and it automatically terminates at 78% Loan-to-Value (LTV).