Quick facts
- •A $350,000 home with 5% down at 6.5% has principal and interest of about $2,102. With property tax, insurance and PMI the real payment is closer to $2,650.
- •Property tax rates vary widely by state: roughly 0.3% of home value in Hawaii against above 2% in New Jersey. On a $500,000 home that is about $750 a month apart.
- •PMI ends automatically when your balance reaches 78% of the original value, and you can usually request removal at 80%.
- •You do not need 20% down to buy. It is simply the point where conventional PMI is no longer required.
- •The 28/36 guideline caps housing at about 28% of gross income and all debts at 36%. It is a lender’s ceiling, not a personal budget.
Quick reference
| Down payment | Loan amount | Principal & interest | Est. PMI |
|---|---|---|---|
| 5% ($15,000) | $285,000 | $1,801 | $119 |
| 10% ($30,000) | $270,000 | $1,707 | $112 |
| 20% ($60,000) | $240,000 | $1,517 | $0 |
Worked examples
A $350,000 house with 5% down at 6.5%: what is the real payment?
About $2,650 a month, not $2,102
Principal and interest on $332,500 is about $2,102. Add roughly $321 for property tax at 1.1%, $100 for insurance and $139 for PMI at 0.5% a year, and the payment is about $2,662. Your own tax, insurance and PMI will differ.
What is the monthly payment on a $270,000 mortgage?
About $1,707 at 6.5%, or $1,796 at 7%, over 30 years
Those are principal and interest only. Taxes and insurance are added to get the total. One extra half point on the rate adds about $90 a month on this loan.
What does a $250,000 mortgage over 30 years cost per month?
About $1,580 a month at 6.5%
Over 360 payments that is roughly $568,900 repaid, so about $318,900 is interest. Paying biweekly instead of monthly would end it at around 24 years.
How much house can I afford on $90,000 a year?
Around $325,000 to $445,000, depending on debts and down payment
At 28% of gross income, housing is about $2,100 a month. After roughly $450 for tax and insurance, that leaves about $1,650 for principal and interest, a loan of about $261,000 at 6.5%. With 20% down that is a home near $326,000. At 36%, with no other debts, the figure is about $445,000. Pre-approval is a ceiling, so leave room for repairs and a job change.
Treating pre-approval as your budget
The mistake
Assuming that because a lender approved you for a certain amount, you can comfortably afford it.
Do this instead
Start from your own monthly budget. Include childcare, debts, savings, maintenance and a cushion. Then work backward to a price.
Why it matters
A payment that uses the whole approval leaves no room for a repair bill, a lost job or an adjustable rate reset.
Why a mortgage calculator matters
The quote is not the payment
- •A loan quote often shows only principal and interest.
- •Property tax, home insurance, PMI and any HOA fees come on top, every month.
- •The gap is often $400 to $700 a month on a typical home.
- •Budget with the full payment so month one is not a shock.
PMI should not last forever
- •PMI protects the lender, not you, and it ends at set equity levels.
- •Servicers must cancel it automatically at 78% of the original value if you are current on payments.
- •You can ask for removal at 80%, usually in writing and sometimes with a new appraisal.
- •Put the date in your calendar instead of waiting for a letter.
Down payment is a trade-off
- •More down means a smaller loan and lower monthly cost, and no PMI at 20%.
- •Less down keeps more cash for repairs and emergencies.
- •Closing costs are separate and are usually 2% to 5% of the loan amount.
- •Try 5%, 10% and 20% side by side before deciding.
What makes this mortgage calculator useful
Full PITI breakdown
Principal, interest, tax, insurance and PMI are shown separately, so you can see where every dollar goes.
PMI timeline
See the month PMI can be requested off at 80% and the month it drops automatically at 78%.
Down payment explorer
Slide the down payment from 3% to 20% and watch the monthly cost and PMI change.
Closing cost estimate
Add closing costs to your down payment to see the cash you actually need on the day.
Professional applications
Real estate agents
Agents use full-payment calculators to set realistic expectations before buyers fall in love with a house.
A buyer comfortable with $2,200 a month in total housing cost should aim lower than a price that needs $2,200 for principal and interest alone.
Loan officers
Loan officers run 15-year and 30-year options and different down payments to match the borrower’s real budget.
On $300,000, 30 years at 6.5% is about $1,896 a month. 15 years at 6% is about $2,532, but total interest drops from about $382,600 to about $155,700.
Financial planners
Planners help clients compare paying down a mortgage against investing the same money.
A 3% mortgage is cheap money. A 7% mortgage is a guaranteed 7% saving if you pay it down.
Historical context
Frequently asked questions
What is PITI?+
PITI stands for principal, interest, taxes and insurance. It is the monthly amount that actually leaves your account, and it is the figure lenders use to decide what you qualify for. PMI and HOA fees are often added to it.
How much down payment do I really need?+
Some conventional loans allow 3% down, and FHA loans allow 3.5% for borrowers who qualify. Below 20% you will usually pay PMI. Putting 20% down avoids PMI and can lower your rate, but waiting years to save it can cost more if prices rise in the meantime.
When does PMI go away?+
By law it ends automatically when your loan balance is scheduled to reach 78% of the home’s original value, provided you are current on payments. You can request cancellation once you reach 80%. Check with your servicer, because the exact process varies.
Should I choose a 15-year or 30-year mortgage?+
A 30-year loan has a lower required payment and more flexibility. A 15-year loan costs far less interest but has a higher payment. Some borrowers take the 30-year and pay extra when they can, keeping the lower payment as a safety net.
What this calculator cannot do+
It cannot know your exact property tax, insurance premium or PMI rate, which depend on the address, your credit and your lender. It also cannot model a rate that adjusts. Use it for planning, then compare it with a Loan Estimate from your lender.