Your result
What your result means
Borrowing $300,000 at 6.5% for 30 years gives a principal-and-interest payment of $1,896.20. Adding property tax ($375.00), insurance ($150.00), PMI ($0.00) and HOA dues ($0.00) brings the estimated total to $2,421.20 a month. If you keep the loan to the end you will pay $382,637 in interest, so the house costs $682,637 in principal and interest alone.
The math
Formula and sources
M = P × r × (1 + r)^n ÷ ((1 + r)^n − 1) Total monthly = M + property tax ÷ 12 + insurance ÷ 12 + PMI + HOA PMI = loan × PMI rate ÷ 12 (only when loan ÷ price > 80%)
- M
- monthly principal-and-interest payment
- P
- amount borrowed (price minus down payment)
- r
- monthly interest rate = annual rate ÷ 12
- n
- number of monthly payments = years × 12
How to calculate a mortgage payment formula by hand: divide the annual rate by 12 to get r, multiply years by 12 to get n, then M = P × r × (1 + r)^n ÷ ((1 + r)^n − 1). That M is principal and interest only — the same fixed-rate formula on the CFPB Loan Estimate. Add property tax ÷ 12, homeowners insurance ÷ 12, PMI (when loan ÷ price > 80%) and HOA dues for the full monthly cost. Taxes and insurance vary by county and insurer, so treat those lines as placeholders for your own quotes.
Sources we checked this against
- 1Loan Estimate sample H-24(B), fixed-rate loanConsumer Financial Protection Bureau · files.consumerfinance.gov
- 2What is private mortgage insurance?Consumer Financial Protection Bureau · consumerfinance.gov
- 3PMT function (payment formula and examples)Microsoft Support · support.microsoft.com
Formula last checked 2026-11-05. Found an error? Tell us and we will fix it.
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Step by step
Two worked examples
30-year loan
Principal & interest
$1,896.20
- Home price
- $375,000
- Down payment
- $75,000
- Interest rate
- 6.5%
- Loan term
- 30 years
- Property tax per year
- $4,500
- Home insurance per year
- $1,800
- HOA dues per month
- $0
- PMI rate per year
- 0.5%
r = 6.5% ÷ 12 = 0.5417%, n = 360. Plugging $300,000 into the formula gives $1,896.20. With taxes and insurance the payment is $2,421.20, and lifetime interest is $382,637.
15-year loan, same home
Principal & interest
$2,491.23
- Home price
- $375,000
- Down payment
- $75,000
- Interest rate
- 5.75%
- Loan term
- 15 years
- Property tax per year
- $4,500
- Home insurance per year
- $1,800
- HOA dues per month
- $0
- PMI rate per year
- 0.5%
Shorter loans usually come with a lower rate. At 5.75% over 180 payments, principal and interest is $2,491.23 (total $3,016.23), but lifetime interest drops to $148,422 — less than half of the 30-year figure.
| Result | Example 1 | Example 2 |
|---|---|---|
| Principal & interest | $1,896.20 | $2,491.23 |
| Estimated monthly payment | $2,421.20 | $3,016.23 |
| Total interest over the loan | $382,637 | $148,422 |
Questions
Frequently asked questions
Does the payment include PMI?
Yes, when your down payment is under 20% of the price. Enter the PMI rate from your lender quote; typical conventional rates run from roughly 0.3% to 1.5% of the loan per year depending on credit score and down payment. On most conventional loans PMI can be removed once you reach 20% equity.
Why is my lender’s number a little different?
Lenders may round the rate, include prepaid items, use your actual tax bill, or quote an FHA or VA loan with different insurance rules. The principal-and-interest line should match to the cent for the same loan amount, rate and term.
What is a good mortgage payment to income ratio?
A widely used U.S. guideline (the “28/36 rule”) keeps housing costs under about 28% of gross monthly income and all debt payments under about 36%. Housing costs here mean principal, interest, taxes, insurance, PMI and HOA. Lenders set their own debt-to-income caps; many conventional loans allow total DTI up to about 43–50% with compensating factors. Use our home affordability calculator to apply the 28% housing ratio to your salary, then compare the result with local payments on our mortgage data pages.
Is the interest rate the same as the APR?
No. The APR folds in certain loan fees, so it is usually higher than the note rate. Use the note rate here, because that is what sets the monthly payment.
When can I stop paying PMI?
On most conventional loans you can ask your lender to cancel PMI once the balance reaches 80% of the home’s original value, and the lender must end it automatically at 78% if you are current on payments (Homeowners Protection Act). FHA mortgage insurance follows different rules. Paying a little extra each month gets you to 80% sooner.