Mortgage Calculator — the whole payment, not just principal and interest

What actually makes up a mortgage payment

When a lender quotes "your payment is $2,388", they almost always mean principal and interest — the part the loan itself determines. Four other things ride along with it, and together they are why the amount that clears your checking account is so much larger.

Principal and interest is the loan being repaid. It is fixed for the life of a fixed-rate mortgage and never changes, no matter what happens to taxes or insurance.

Property tax is collected monthly into an escrow account and paid to your county once or twice a year on your behalf. It moves with assessed value and local rates, so this is the line most likely to make your payment rise after year one.

Homeowners insurance is escrowed the same way. Premiums have risen sharply in coastal and wildfire-exposed states, and a renewal increase lands in your monthly payment without the loan changing at all.

HOA dues are not escrowed and are not paid to the lender — you pay the association directly — but they are money you must find every month, and lenders count them in your ratios, so they belong in any honest payment figure.

Mortgage insurance protects the lender, not you, and is charged when you put down less than 20 percent. Unlike the others it is temporary, which is the single most useful thing to understand about it.

PMI has an expiry date — and nobody reminds you

Private mortgage insurance is the cost of a small down payment, typically 0.3% to 1.5% of the loan each year. What most calculators get wrong is treating it as permanent. It is not. Under the federal Homeowners Protection Act, on a borrower-paid conventional loan:

• You may request cancellation once the balance reaches 80% of the original property value.
• The servicer must terminate it automatically at 78%, provided you are current on payments.

Both thresholds run off the original value and the original amortization schedule — not what the house is worth today. The gap between the two is the part worth acting on: nobody cancels it for you at 80 percent. You have to write and ask, and the months between 80 and 78 percent are pure avoidable cost. The calculator above shows both months so you know when to send the letter.

One consequence follows directly: because the trigger is a balance, anything that drives the balance down faster pulls the date forward. An extra payment saves interest and shortens the PMI period, which is why the result above reports those two savings separately rather than lumping them together.

Why an extra payment early beats the same payment later

Interest is charged on the outstanding balance, which is at its largest on day one. A dollar of extra principal in year two removes interest on that dollar for twenty-eight remaining years; the same dollar in year twenty-five removes interest for five. The arithmetic is not close.

Open a year in the amortization schedule and the point becomes visual. In the early years most of each payment is interest and only a sliver is principal; by the final years that ratio has completely inverted. Extra payments in the steep part of that curve are doing the most work.

There is a genuine counter-argument worth stating. Money used to prepay a mortgage is money not invested, not held as an emergency fund, and not available again without a refinance or a HELOC. Prepaying a 6.5% mortgage is a guaranteed 6.5% return, which is excellent for a risk-free outcome — but only after higher-rate debt is cleared and a cash reserve exists. If you are carrying credit card balances at 20%+, that is the debt to attack first.

The 28/36 rule, and what it does not tell you

Two long-standing lender guidelines. The front-end ratio is housing cost against gross monthly income, conventionally capped at 28%. The back-end ratio adds every other monthly obligation — car payments, student loans, minimum card payments — and is conventionally capped at 36%.

They are rules of thumb, not statute. Lenders approve above both lines every day where the credit score, cash reserves or down payment are strong, and some loan programs run materially higher. Passing them is not approval and failing them is not rejection.

What the ratios genuinely capture is crowding-out. They are measured against gross income, so a household at exactly 36% is committing rather more than 36% of what actually arrives after tax. And nothing in either ratio accounts for childcare, medical costs, retirement saving or maintenance — and maintenance on a house is not optional. Treat the thresholds as the point where a payment starts leaving less room than the numbers suggest.