How your mortgage payment is calculated
A fixed-rate mortgage payment stays the same every month. Early payments go mostly toward interest. Over time, more of each payment pays down the loan itself. The formula lenders use is:
P is the loan amount (price minus down payment), r is the annual rate divided by 12, and n is the number of monthly payments. Property tax, homeowners insurance and HOA dues are added on top. Together these are often called PITI.
How much down payment do I need?
Conventional loans allow as little as 3% down, but putting less than 20% down usually adds private mortgage insurance (PMI) until you reach 20% equity. A larger down payment also lowers the monthly payment and the total interest you pay.
Frequently asked questions
Does a 15-year mortgage save money?
Yes. The monthly payment is higher, but 15-year loans usually have lower rates and you pay interest for half as long. That often cuts total interest by more than half.
What is an amortization schedule?
It is a table showing how each payment splits between interest and principal, and how the balance falls over the life of the loan. You can view yours above.
Is property tax included in my mortgage payment?
Many lenders collect tax and insurance through an escrow account, so they are part of the monthly bill even though they are not part of the loan.