Calculate your monthly mortgage payment, total interest, and amortization schedule. Include property taxes, insurance, PMI, and HOA fees for complete home ownership costs.
A mortgage is a loan secured by property, usually real estate. The lender helps the buyer pay the seller of a house, and the buyer agrees to repay the money borrowed over a period of time, typically 15 or 30 years. Each month, a payment is made that includes both principal (the original amount borrowed) and interest (the cost of borrowing).
Your monthly mortgage payment typically includes more than just principal and interest. It often includes property taxes, home insurance, and possibly private mortgage insurance (PMI) and homeowner association (HOA) fees. Understanding all these components helps you budget accurately for homeownership.
Where: M = Monthly payment, P = Principal, r = Monthly interest rate, n = Number of payments
| Component | Description | Typical Range |
|---|---|---|
| Principal & Interest | Loan repayment and borrowing cost | 70-85% of payment |
| Property Taxes | Annual taxes paid to local government | 0.5-2.5% of home value |
| Home Insurance | Protection against property damage | $300-$2,000+ annually |
| PMI | Required if down payment < 20% | 0.3-1.9% of loan annually |
| HOA Fees | Community maintenance costs | $50-$500+ monthly |
| Loan Term | Monthly Payment | Total Interest | Best For |
|---|---|---|---|
| 15 years | Higher | Much lower | Lower total cost, faster equity building |
| 20 years | Moderate | Lower | Balance of payment and total cost |
| 30 years | Lower | Higher | Lower monthly payment, more cash flow |
Predictable payments, protection from rate increases
Lower initial rate, payment can increase over time
When Required: Down payment less than 20% of home value
Cost: Typically 0.3% to 1.9% of loan amount annually
Removal: Can be cancelled when loan balance reaches 78-80% of original home value
Types: Monthly premium, upfront premium, or combination
| State | Avg Property Tax Rate | Annual Tax on $400K Home |
|---|---|---|
| New Jersey | 2.49% | $9,960 |
| Illinois | 2.27% | $9,080 |
| Texas | 1.80% | $7,200 |
| California | 0.75% | $3,000 |
| Hawaii | 0.28% | $1,120 |
Early Payments: Most of payment goes to interest, little to principal
Middle Years: Interest and principal portions become more balanced
Later Payments: Most of payment goes to principal, little to interest
Total Interest: Can equal or exceed the original loan amount over 30 years
| Cost Category | Annual Amount | Description |
|---|---|---|
| Maintenance | 1-3% of home value | Repairs, upkeep, improvements |
| Utilities | $2,000-$5,000+ | Electric, gas, water, internet |
| Landscaping | $500-$3,000 | Lawn care, garden maintenance |
| Security | $200-$1,000 | Alarm systems, monitoring |
Credit Check: Lender reviews credit score and history
Income Verification: Pay stubs, tax returns, employment verification
Asset Documentation: Bank statements, investment accounts
Debt Analysis: Current debts and monthly obligations
| Cost Type | Typical Range | Who Pays |
|---|---|---|
| Loan Origination | 0.5-1% of loan | Buyer |
| Appraisal | $300-$700 | Buyer |
| Title Insurance | 0.5-1% of loan | Buyer/Seller |
| Attorney Fees | $500-$1,500 | Buyer |
| Recording Fees | $100-$500 | Buyer |