Monthly mortgage payment with PITI — principal, interest, taxes, and insurance. Full amortization schedule for any loan amount and term.
A mortgage payment has four components — collectively called PITI: Principal (the loan amount being repaid), Interest (the lender's charge), Taxes (property taxes escrowed monthly), and Insurance (homeowner's insurance). Understanding each component helps you accurately budget for homeownership.
Principal + Interest Formula: M = P × [r(1+r)^n] / [(1+r)^n - 1] where P is loan amount, r is monthly interest rate, and n is total number of payments (months). This is the standard amortization formula used by all US lenders.
| Loan | $400,000 at 7% | Monthly Payment | Total Interest | Total Cost |
|---|---|---|---|---|
| 30-year fixed | $320,000 loan | $2,129 | $445,888 | $765,888 |
| 15-year fixed | $320,000 loan | $2,876 | $197,736 | $517,736 |
| Savings with 15-yr | — | $747 higher/mo | $248,152 saved | $248,152 saved |
The 15-year mortgage saves $248,152 in interest on a $320,000 loan but requires $747/month more. If the $747 monthly difference were invested in the S&P 500 at 10% instead, it would grow to approximately $480,000 over 15 years — potentially making the 30-year mortgage the better financial choice for disciplined investors.
If your down payment is less than 20%, lenders require Private Mortgage Insurance (PMI) at 0.5–1.5% of the loan amount annually. On a $320,000 loan at 1%, PMI adds $267/month. PMI automatically cancels when your equity reaches 20% (you can also request cancellation at 20%). This is the primary financial reason to put 20% down — saving the PMI cost.
As of 2026, 30-year fixed mortgage rates are in the 6.5–7.5% range. Rates vary by credit score, down payment, lender, and loan type. A FICO score above 740 qualifies for the best rates — typically 0.25–0.75% lower than scores in the 620–680 range. On a $300,000 loan, a 0.5% rate difference changes your payment by $95/month and $34,000 in total interest over 30 years.
The standard guideline is the 28/36 rule: your mortgage payment (PITI) should not exceed 28% of gross monthly income, and total debt payments should not exceed 36%. On $100,000 annual income ($8,333/month), your maximum PITI is $2,333/month, supporting roughly $300,000–350,000 in home price with 20% down at current rates.