How to Estimate a Monthly Mortgage Payment

Last updated: August 2026

Understanding what goes into a mortgage payment helps you budget realistically before making an offer on a home. This guide walks through each component of a standard U.S. mortgage payment.

What Is PITI?

Most U.S. mortgage payments consist of four parts, commonly called PITI:

• Principal: The amount you borrowed, which you pay down over time.
• Interest: What the lender charges for borrowing the money, expressed as an annual percentage rate (APR).
• Taxes: Property taxes assessed by your local government, typically 1-2% of your home's value per year.
• Insurance: Homeowners insurance, which protects against damage and liability.

Step-by-Step: Using a Mortgage Calculator

1. Home price. Enter the purchase price of the home you're considering. For example, if you're looking at homes listed at $400,000, use that as your starting point.

2. Down payment. The percentage of the home price you'll pay upfront. A 20% down payment ($80,000 on a $400,000 home) lets you avoid Private Mortgage Insurance (PMI). Conventional loans may accept as little as 3%; FHA loans may go as low as 3.5%. The higher your down payment, the lower your monthly principal and interest.

3. Interest rate. Enter the annual interest rate. As of 2026, 30-year fixed mortgage rates have fluctuated between roughly 6% and 7%. Check current rates at Freddie Mac's PMMS. Use the Mortgage Calculator to see how even a 0.5% difference affects your payment.

4. Loan term. Most homebuyers choose a 30-year term for lower monthly payments, or a 15-year term to pay less total interest but with higher monthly payments.

5. Property tax and insurance. Your lender will estimate these during the loan process. For a rough estimate, budget 1-2% of home value for taxes and $1,000-$2,000/year for insurance, but verify with local tax records and insurance quotes.

Worked Example

Home price: $400,000. Down payment: 20% ($80,000). Loan amount: $320,000. Interest rate: 6.5%. Term: 30 years. Estimated property tax: $4,000/year. Estimated insurance: $1,500/year.

Monthly principal & interest: approximately $2,022.62. Monthly property tax: $333.33. Monthly insurance: $125.00. Total PITI: approximately $2,480.95/month.

Try it yourself: Mortgage Calculator.

What's Not Included

• PMI: If your down payment is below 20%, budget 0.5% to 1.5% of the loan amount per year.
• HOA fees: Condos and some neighborhoods charge monthly homeowners association dues.
• Closing costs: Typically 2-5% of the home price, paid at closing.
• Maintenance: Budget roughly 1% of home value per year for repairs and upkeep.

Key Takeaway

Your total monthly housing cost should ideally not exceed 28% of your gross monthly income. Use our DTI Ratio Calculator to check where you stand.

This guide is for informational purposes only. Consult a mortgage professional for personalized advice.