Principal and interest is only part of a mortgage payment. Property taxes, homeowners insurance and sometimes mortgage insurance and HOA dues all add up. This guide breaks down a typical payment and shows how the loan term, rate and down payment change it.
The four pieces of a mortgage payment
- Principal and interest (P&I). The part that repays the loan.
- Property tax. Varies widely by location, from well under 1% to over 2% of the home value per year, and is often collected monthly in escrow.
- Homeowners insurance. Varies by location and home.
- PMI and HOA. Private mortgage insurance usually applies when you put down less than 20%. HOA dues apply to some communities.
Example: $450,000 home, 20% down, 6.75% for 30 years
| Item | Monthly |
|---|---|
| Principal and interest on a $360,000 loan | $2,334.95 |
| Property tax (1.2% of price per year) | $450.00 |
| Insurance ($1,400 per year) | $116.67 |
| Total | $2,901.62 |
Over 30 years you would pay about $480,583 in interest on top of the $360,000 you borrowed.
15-year vs 30-year loan
| Term | Monthly P&I | Total interest |
|---|---|---|
| 15 years | $3,185.67 | $213,421 |
| 20 years | $2,737.31 | $296,955 |
| 30 years | $2,334.95 | $480,583 |
The 15-year loan costs about $851 more per month but saves roughly $267,000 in interest. Whether that is the right trade depends on your budget and other goals.
What a lower down payment does
With 10% down ($45,000), the loan is $405,000 and P&I rises to $2,626.82. At a PMI rate of 0.7% of the loan per year, PMI adds about $236 a month until the balance falls to roughly 80% of the home value. Real PMI rates vary with credit score and loan type, so use your lender's quote.
Rates matter
| Rate | Monthly P&I (30 years, $360,000) | Total interest |
|---|---|---|
| 5.75% | $2,100.86 | $396,310 |
| 6.75% | $2,334.95 | $480,583 |
| 7.75% | $2,579.08 | $568,470 |
Extra payments
Adding principal each month shortens the loan. On the same $360,000 loan at 6.75%:
- +$200 a month: paid off in 286 months (about 23 years 10 months), saving roughly $115,900 in interest.
- +$500 a month: paid off in 224 months (about 18 years 8 months), saving roughly $207,400 in interest.
Confirm with your lender that extra payments are applied to principal and that there is no prepayment penalty.
Calculate your own mortgage payment →
Frequently asked questions
When can I remove PMI?
On many conventional loans you can request removal once your balance reaches about 80% of the original home value, and it ends automatically at a lower threshold. Check your loan terms.
Are closing costs included?
No. Closing costs, points and changes in tax or insurance bills are not included in the estimate.
Is the rate in the calculator what I will get?
No. It is an example. Your rate depends on your credit, down payment, loan type and the market on the day you lock.
This article is for general education and uses estimates. It is not financial, tax or legal advice. Your actual numbers depend on your lender, employer, tax situation and location. See our disclaimer.