Mortgage Payment Calculator

What a mortgage payment is really made of

Four or five separate things get bundled into the number you pay each month, and only one of them is the loan. Principal and interest is the mortgage itself. Property tax and homeowners insurance are usually collected by the servicer in an escrow account, then paid on your behalf when the bills come due — which is why the servicer can raise your monthly draw even though your loan payment never moves. HOA dues go to the association, not the lender. PMI is insurance that protects the lender, not you, and it exists only while the loan is more than 80% of the home's value.

That last part matters: when people say "my mortgage is $2,500 a month," most of them are describing an escrowed payment, not a loan payment. On the defaults in this page, the loan is $2,064.89 and the rest — $425.00 — is tax and insurance. Over a year that is $5,100 that never touches the balance.

There is no such thing as a state property tax rate

This is the single biggest thing wrong with how property tax gets presented online. You will find pages listing "the property tax rate in New Jersey: 2.21%" as if it were a number you could look up and multiply. It is not. Property tax is levied by overlapping local jurisdictions — the county, the city or township, the school district, and assorted special districts such as fire, library or water authorities. Each sets its own levy against the same property, and nobody at the state level sets the rate at all. The state figure is just the average of county figures, which is why it describes almost nobody.

The spread inside a single state is the proof. From this page's dataset, the county-level effective rates run:

• New Jersey — 1.22% in Cape May County to 2.93% in Salem County, a 2.4× spread inside one small state.
• Texas — 0.41% in McMullen County to 2.03% in El Paso County, nearly 5×.
• Wisconsin — 0.73% in Vilas County to 3.56% in Menominee County, nearly 5×.
• Illinois — 0.96% in Hardin County to 2.58% in Lake County, 2.7×.
• New York — 0.71% in Kings County to 2.92% in Allegany County, 4.1×.

And a county figure is a proxy, because the county is usually not the government that sends the bill. Inside New Jersey the municipal rates run 0.36% in Avalon to 4.57% in Salem city — while Salem County's own rate is 2.93%, so the city sits 1.6 points above the county that contains it, and Camden city (2.06%) sits below Camden County (2.83%). A county picker cannot tell you that, which is why the search above covers 19,465 municipalities as well as the counties, from 323 in New Jersey to 1,224 in Texas, priced from the same release and loaded one state at a time.

Nationwide the county file runs from effectively zero — Northwest Arctic Borough, Alaska, where the Census mean is $3 a year of property tax and the margin of error is larger than the figure itself — to 3.56% in Menominee County, Wisconsin. The honest working range for places people actually live is roughly 0.3% to 3.6%, more than tenfold. A calculator that hands you one state number is telling you nothing about your house. That is why this page asks for a city or county, draws the rate from the Census figures for that place, prints its name and which level it is next to the figure, and still lets you overwrite the rate by hand.

One more honest caveat: the rate here is medians divided by medians — or the mean where the median is censored — which is the standard way to compare places, not a millage rate on your specific parcel. Special assessments and homestead exemptions in your district can move your real bill by a few hundred dollars a year either way, and a small town's estimate carries a wider sampling error than a large county's. Where that error is over 20%, the line under the rate field says so.

PMI, and exactly when it goes away

Private mortgage insurance is a monthly premium that protects the lender if you default. It is normally required on a conventional loan when the down payment is less than 20% of the price, because the lender's exposure is above 80% loan-to-value. It typically costs 0.3% to 1.5% of the loan per year depending on credit score and down payment; this page uses 0.5%.

Two things people get wrong. First, PMI is not charged at 20% down — a 20% down payment puts the loan at exactly 80% LTV, which is the threshold, and PMI should not appear at all. Second, PMI does not last the full term. It ends when the loan reaches 80% of the home's value, which happens on its own schedule, years earlier than the term ends.

A worked example. $400,000 price, 10% down, so a $360,000 loan at 6.7% fixed for 30 years. The payment is $2,323.00 and PMI adds $150.00 a month — 6.5% on top. The balance falls to 80% of $400,000 after payment 97 — 8 years and 1 month — after which PMI stops. Paid over those 97 months it costs $14,550, and dropping it is worth $150 a month, or $1,800 a year, for the remaining 22 years. Under the Homeowners Protection Act the servicer must terminate PMI automatically once the balance is scheduled to reach 78% of the original value, and you can request cancellation at 80% — so if you reach 80% and the charge is still there, ask, with the appraisal or the payment record in hand.

Extra principal payments move that date closer, for the obvious reason: you are lowering the balance faster. Run the numbers in the extra payment payoff calculator to see how much a few hundred dollars a month pulls the PMI drop-off date forward.

PMI and MIP are not the same thing

Both are mortgage insurance, both protect the lender rather than you, and they are entirely different products. PMI is private mortgage insurance: an insurer prices it from your credit score and down payment, it exists only while a conventional loan is above 80% loan-to-value, and it is a flat charge that ends for good once the balance reaches that line. MIP is the FHA's mortgage insurance premium: the government sets it in a published table, it is charged on every FHA loan regardless of down payment, and it is charged on the declining balance so it gets smaller each month.

The difference that actually costs people money is how long each one lasts. On a conventional loan, PMI ends — at 80% LTV on request, at 78% automatically under the Homeowners Protection Act, and at the midpoint of the term at the latest. On an FHA loan, annual MIP ends after eleven years only if you put at least 10% down. Put 3.5% down, which is the standard FHA loan, and you are above 90% loan-to-value at closing — so the premium runs for all 30 years. Paying extra principal does not remove it, because it is not tied to the balance crossing a threshold. Refinancing into a conventional loan once you have 20% equity is the usual exit.

That is why this page asks for the loan type. A calculator that prices only PMI will tell an FHA buyer their mortgage insurance stops after payment 97 when on their actual loan it never stops.

Why the first years are almost all interest

Interest is charged on the balance you still owe. At the start, that balance is the entire loan, so the interest charge is at its largest and the principal part of the payment is at its smallest. On the defaults here — $320,000 at 6.7% for 30 years — the first payment of $2,064.89 splits into $1,786.67 of interest and $278.22 of principal. Interest is 86.5% of the payment.

Across the whole first year you hand over $24,778.68 and only $3,443.13 of it — 13.9% — reduces the loan. The split improves slowly, because each month's principal payment only slightly reduces the balance that the next month's interest is charged on. Interest and principal do not even become equal on a single payment until payment 237, nearly twenty years in.

That is not a trick or a bad loan; it is what a level payment over a long term has to look like. It does explain two things people find surprising: why selling a house after three years can leave you owing almost what you borrowed, and why an extra payment made early is worth far more than the same amount paid in year twenty. The cumulative chart above shows the two lines and where they meet — and on a 30-year loan at today's rates, they may never meet inside the term at all.

What this page does not know

• Your actual rate. 6.7% is a published average for a 30-year fixed loan, not a quote. Your credit score, points and lender decide the real number.
• Escrow changes. Taxes and insurance rise; the loan payment does not. The section below projects that with one inflation assumption, derived from BLS data and printed there — not a guess at your county's tax trajectory. If you want to stress-test the payment itself, raise the tax rate or the premium above and watch the total move.
• Statutory caps on property tax. Some states cap how fast an assessed value may rise (California's Proposition 13 is the best known); most, including New Jersey, do not. This page applies one inflation rate to every running cost rather than pretending to know your state's rule — read your own state's statute before relying on any projection.
• The rate you actually get. FHA mortgage insurance here is priced from HUD's published table, but your FHA interest rate is still a quote from a lender, exactly like a conventional one.
• Closing costs and points. Not modelled here. They are real money at closing but they do not change the monthly payment unless you finance them.
• Your exact payoff. Off by a few dollars by construction, as described above.

Frequently asked questions

Do I have to pay PMI if my down payment is under 20%?

Usually yes, on a conventional loan. It is typically about 0.5% of the loan per year, added to the monthly payment. This page charges it only when the down payment is under 20% of the price, and stops it at the payment where the balance first reaches 80% of the price. At exactly 20% down, the answer is no — and this page shows a card saying so rather than hiding it. On an FHA loan the equivalent premium is charged at every down payment, including 20% — see the next question.

What is FHA MIP, and how is it different from PMI?

MIP is the FHA's mortgage insurance premium, and it is a different product from private mortgage insurance. It has two parts: an upfront premium of 1.75% of the base loan amount, usually added to the loan, and an annual premium charged monthly on the declining balance. The rate is not negotiated — HUD publishes it in a table (Handbook 4000.1, Appendix 1.0) indexed by loan size, loan-to-value and term, and it currently runs from 0.15% to 0.75% a year.

The part that surprises people is the duration. At or below 90% loan-to-value the premium stops after 11 years. Above 90% — a 3.5% down payment is 96.5% loan-to-value — it is charged for the entire term, and extra principal payments do not remove it. So an FHA borrower who puts the minimum down pays mortgage insurance in every one of the 360 payments, where an identical conventional borrower with 10% down pays PMI for about eight years.

Why isn't there a state property tax rate?

Because property tax is levied by overlapping local jurisdictions — county, city or township, school district, and special districts — not by the state. Each sets its own levy, so the rate that applies to you is set at your address. A state rate is nothing but the average of its counties, and the spread inside a state is usually wider than the spread between states: 1.22% to 2.93% in New Jersey, 0.41% to 2.03% in Texas. Step down one more level, to the municipality that actually bills you, and it widens again — New Jersey's city and township rates run 0.36% to 4.57%, and Salem city sits 1.6 points above the county of the same name.

Why does almost all of my early payment go to interest?

Interest is charged on the outstanding balance, and early on that balance is the whole loan. On $320,000 at 6.7%, the first payment is $1,786.67 of interest against $278.22 of principal — 86.5% interest. The split does not reach 50/50 on a single payment until payment 237. Only the principal part reduces what you owe.

Will my payment really stay the same for 30 years?

The principal-and-interest part will, on a fixed-rate loan. The escrowed parts will not. Property tax and insurance are usually collected monthly and re-estimated every year, and both tend to rise, so the amount withdrawn from your account typically climbs while the loan payment stays put. HOA dues change too.

Why is my lender's payoff figure a few dollars different from this one?

Lenders round the payment to the cent and charge interest on the rounded balance; this page keeps full precision and rounds for display. Over 360 payments that is a few dollars either way. A payoff statement also includes per-diem interest up to the payoff date, which a monthly schedule cannot show. Use this as accurate to within a few dollars.

Does the tax rate apply to my purchase price forever?

No. The effective rate is applied to the price here as a day-one proxy for assessed value. Assessments change, many jurisdictions assess below market value, exemptions vary by county and by owner, and levies are reset every year. Check the assessor for the municipality that bills you for the figure that will actually be charged.

Is a 15-year mortgage always the cheaper choice?

Cheaper in total interest, always, because you borrow for half as long and usually at a lower rate. Whether it is the better choice depends on the payment: $320,000 at 6.0% over 15 years is $2,700.34 a month against $2,064.89 — about $635 more, every month, for 15 years. If that fits comfortably, the interest saved is large. If it does not, take the 30-year and make extra principal payments when you can, then compare the two in the extra payment payoff calculator.