Quick answer: with a 400,000 home, 20% down (a 320,000 loan) at 6.5% for 30 years, the principal-and-interest payment is about 2,023 a month. Add property tax, insurance and any PMI or HOA to get the full monthly cost – the calculator shows each part and a year-by-year balance.
What goes into a monthly mortgage payment
Lenders often talk about PITI: principal, interest, taxes and insurance. The loan itself (principal and interest) is fixed on a fixed-rate mortgage; the rest can change every year.
| Part | What it is | Example on a 400,000 home |
|---|---|---|
| Principal & interest | The loan repayment | 2,022.62 (320,000 at 6.5%, 30 years) |
| Property tax | Local tax, often collected monthly into escrow | 366.67 at 1.1% a year |
| Insurance | Homeowner’s insurance | 125.00 at 1,500 a year |
| PMI | Private mortgage insurance when the loan is above 80% of the price | 0 with 20% down |
Over 30 years that 320,000 loan costs about 408,142 in interest – more than the loan itself. A 15-year term at the same rate raises the payment to about 2,788 but cuts total interest to roughly 181,800.
How much down payment?
20% avoids PMI on most conventional US loans and gives you a lower rate in many countries. Smaller deposits are common – 3–10% in the US, 5–10% in the UK, 15–30% in Pakistan’s bank-financed housing schemes – but they mean a bigger loan and, in the US, PMI until you reach about 20% equity.
A rule of thumb for affordability
Many lenders like your total housing cost to stay under about 28% of gross monthly income, and all debts under about 36%. With a full payment of around 2,500, that suggests an income of roughly 9,000 a month. Use the salary calculator to convert yearly pay to monthly.
Check what the payment means for your budget with the salary calculator, and compare a car or personal loan with the loan (EMI) calculator. If you are saving for the deposit, the compound interest calculator shows how long it may take.
How to estimate a mortgage payment
- Enter the price and down payment. Give the deposit as a percentage or an amount.
- Add the rate and term. Use the yearly rate from the lender and the loan length in years.
- Fill in the extras. Property tax, insurance, PMI and HOA are optional but show the real monthly cost.
- Review the schedule. Open the yearly table to see how the balance falls and how much interest you pay each year.
How much the rate really matters
The same 320,000 loan over 30 years at three different rates:
| Rate | Monthly principal & interest | Total interest |
|---|---|---|
| 5.5% | 1,816.92 | 334,093 |
| 6.5% | 2,022.62 | 408,142 |
| 7.5% | 2,237.49 | 485,495 |
One percentage point changes the payment by about 210 a month and the total cost by roughly 75,000. Shopping around for half a point, or improving your credit score before applying, is worth real money.
Common mistakes when budgeting for a home
- Looking only at principal and interest – tax, insurance and fees can add 20–30%.
- Forgetting closing costs and moving costs paid upfront.
- Using the maximum the bank will lend instead of what fits your budget.
- Ignoring maintenance – a common rule of thumb is 1% of the home’s value per year.
Frequently asked questions
How is a mortgage payment calculated?
The loan part uses the standard amortisation formula: P × r × (1 + r)^n ÷ ((1 + r)^n − 1), with r the monthly rate and n the number of months. Tax, insurance, PMI and HOA are added on top.
What is PMI and when do I pay it?
Private mortgage insurance protects the lender on conventional US loans when you borrow more than 80% of the home’s value. It can usually be removed once you reach 20% equity.
Does this work for UK, Canadian or Pakistani mortgages?
Yes for the repayment itself – the maths is the same. Leave out PMI and HOA if they do not apply; Canadian fixed mortgages compound semi-annually, so lender figures may differ slightly.
Is a 15-year or 30-year mortgage better?
A 15-year loan has higher payments but far less total interest. A 30-year loan is more affordable monthly but costs much more overall.
Does the calculator include closing costs?
No. Closing costs (often 2–5% of the price) are paid upfront and are not part of the monthly payment.
What about adjustable-rate mortgages?
Enter the starting rate to see the first payment. Payments will change when the rate resets.
How much does 1% on the interest rate change my payment?
On a 320,000, 30-year loan it is about 210 a month and roughly 75,000 over the life of the loan. Enter your own figures to see the exact difference.
Should I make a bigger down payment?
A bigger deposit lowers the loan, the payment and often the rate, and avoids PMI above 80% loan-to-value. Keep enough savings for emergencies, though.