See principal, interest, taxes, insurance and PMI — then what the loan really costs over 30 years.
Total monthly payment
$3,024
Principal, interest, taxes, insurance, PMI and HOA combined.
Removable at 20% equity.
Over 30 years.
Principal and interest is $2,319, which is 77% of the total. The remaining $705 covers property tax, insurance, PMI — costs that never build equity. Over 30 years you would pay $473,625 in interest on a $361,250 loan.
Because your down payment is under 20%, you pay private mortgage insurance that protects the lender, not you. At your current payment schedule the balance reaches 80% of the purchase price around month 58 (4 years, 10 months in), at which point you can request removal in writing. Lenders are required to cancel it automatically at 78%, but they will not do it early unless you ask.
Adding $200 of principal monthly would clear the loan in 23 years, 11 months rather than 30 years. Because the payment is fixed, every additional dollar reduces the balance that future interest is calculated on — which is why small extra payments early are worth far more than large ones later.
Fifteen-year mortgages typically price about half a point below 30-year loans. At 6.15% your payment would be $3,078 — $759 more each month — but total interest drops from $473,625 to $192,751. If the higher payment would strain your budget, taking the 30-year loan and voluntarily overpaying captures most of the saving while keeping the lower payment as a safety valve.
Compare loan termsA lender will approve you based on debt-to-income ratios that ignore childcare, commuting and retirement saving. Before committing to $3,024 a month, run the affordability calculator with your real budget — and compare against renting if you might move within five years.
Home affordability calculatorProperty tax rates, insurance costs and income tax vary enormously between states. These versions load local averages so you start from a realistic baseline.
Worked scenarios with the full analysis, so you can see how the numbers move before entering your own.
A typical first-time buyer in a mid-priced US market putting down less than 20%, so PMI applies until they reach 20% equity.
Total monthly payment
$3,024
Principal and interest is $2,319, which is 77% of the total. The remaining $705 covers property tax, insurance, PMI — costs that never build equity. Over 30 years you would pay $473,625 in interest on a $361,250 loan.
Because your down payment is under 20%, you pay private mortgage insurance that protects the lender, not you. At your current payment schedule the balance reaches 80% of the purchase price around month 58 (4 years, 10 months in), at which point you can request removal in writing. Lenders are required to cancel it automatically at 78%, but they will not do it early unless you ask.
Adding $200 of principal monthly would clear the loan in 23 years, 11 months rather than 30 years. Because the payment is fixed, every additional dollar reduces the balance that future interest is calculated on — which is why small extra payments early are worth far more than large ones later.
A buyer who reached the 20% threshold, eliminating PMI entirely and lowering both the payment and the loan balance.
Total monthly payment
$1,892
Principal and interest is $1,517, which is 80% of the total. The remaining $375 covers property tax, insurance — costs that never build equity. Over 30 years you would pay $306,107 in interest on a $240,000 loan.
Adding $200 of principal monthly would clear the loan in 21 years, 10 months rather than 30 years. Because the payment is fixed, every additional dollar reduces the balance that future interest is calculated on — which is why small extra payments early are worth far more than large ones later.
Fifteen-year mortgages typically price about half a point below 30-year loans. At 6% your payment would be $2,025 — $508 more each month — but total interest drops from $306,107 to $124,546. If the higher payment would strain your budget, taking the 30-year loan and voluntarily overpaying captures most of the saving while keeping the lower payment as a safety valve.
Compare loan termsA move-up buyer choosing a shorter term to cut lifetime interest, accepting a substantially higher monthly payment.
Total monthly payment
$4,974
Principal and interest is $4,140, which is 83% of the total. The remaining $833 covers property tax, insurance — costs that never build equity. Over 15 years you would pay $257,734 in interest on a $487,500 loan.
Adding $200 of principal monthly would clear the loan in 13 years, 11 months rather than 15 years. Because the payment is fixed, every additional dollar reduces the balance that future interest is calculated on — which is why small extra payments early are worth far more than large ones later.
A lender will approve you based on debt-to-income ratios that ignore childcare, commuting and retirement saving. Before committing to $4,974 a month, run the affordability calculator with your real budget — and compare against renting if you might move within five years.
Home affordability calculatorThe same first-time buyer scenario, showing what a modest recurring overpayment does to the payoff date and total interest.
Total monthly payment
$3,024
Principal and interest is $2,319, which is 77% of the total. The remaining $705 covers property tax, insurance, PMI — costs that never build equity. Over 30 years you would pay $473,625 in interest on a $361,250 loan.
Because your down payment is under 20%, you pay private mortgage insurance that protects the lender, not you. At your current payment schedule the balance reaches 80% of the purchase price around month 32 (2 years, 8 months in), at which point you can request removal in writing. Lenders are required to cancel it automatically at 78%, but they will not do it early unless you ask.
Paying an additional $300 toward principal each month clears the loan in 21 years, 10 months instead of 30 years — 8 years, 2 months earlier. Every extra dollar goes straight to principal, so the return is effectively a guaranteed 6.65% tax-free.
Lenders quote principal and interest, but that is rarely what leaves your account. The industry shorthand is PITI — principal, interest, taxes and insurance — and for most US buyers it is 25–40% higher than the quoted figure.
Principal repays the amount borrowed and is the only component that builds equity. Interest is the lender's charge. Property taxes are collected monthly into an escrow account and paid to your county on your behalf. Homeowners insurance works the same way. If your down payment is under 20%, private mortgage insurance is added, and a condo or planned community adds HOA dues on top of everything else.
Amortization schedules are counterintuitive on first encounter. In the first year of a 30-year mortgage at 6.65%, roughly 80% of each payment goes to interest and only 20% to principal. That ratio inverts slowly, and the crossover point — where more of your payment goes to principal than interest — typically arrives around year 18.
This is why an extra payment in year two is worth several times the same payment in year 25. Early principal reductions remove interest that would have accrued for the entire remaining term. It is also why refinancing late into a loan can increase lifetime interest even at a lower rate: restarting the amortization clock puts you back at the interest-heavy beginning.
Private mortgage insurance protects the lender against your default. It provides you no benefit whatsoever, which makes removing it one of the highest-value housekeeping tasks a homeowner has.
Under the Homeowners Protection Act, servicers must cancel PMI automatically when the balance reaches 78% of the original purchase price, and must honor a written request at 80%. Waiting for the automatic threshold costs you months of unnecessary premiums. If your home has appreciated, many lenders will also drop PMI based on a new appraisal well before the scheduled date — the appraisal typically costs $400–600 and frequently pays for itself within a year.
Discount points are prepaid interest: one point costs 1% of the loan and typically reduces the rate by 0.25 percentage points, though the exact trade varies by lender and day.
The calculation is a break-even. Divide the point cost by the monthly payment reduction to find how many months you must keep the loan for the purchase to pay off — commonly 4 to 7 years. If you are likely to sell or refinance before then, points lose money. If you are certain this is a long-term home and rates are unlikely to fall further, they are a reasonable use of cash — though for most buyers, applying the same money to the down payment to eliminate PMI produces a better return.
The number in a rate advertisement excludes taxes, insurance and PMI. Buyers who budget from it are routinely surprised by a payment 25–40% higher than planned. Always budget from the full PITI figure.
Approval amounts are based on debt-to-income ratios that ignore childcare, commuting, retirement contributions and the cost of maintaining the home itself. The approved number is a ceiling, not a recommendation.
Servicers cancel automatically at 78% of original value but will honor a written request at 80%. The difference is commonly 6–14 months of premiums you never had to pay.
A widely used planning figure is 1% of home value annually — $4,250 a year on a $425,000 home. Older homes run higher. This is not part of your mortgage payment, which is exactly why it gets left out.
The Consumer Financial Protection Bureau found that borrowers who compare multiple lenders save meaningfully. Rate shopping within a 45-day window counts as a single credit inquiry, so there is no score penalty for comparing.
Using the 28% rule, roughly $2,333 a month toward housing, which at 6.65% with 15% down supports a home in the $330,000–370,000 range depending on your property tax rate and insurance costs. That is a ceiling rather than a target — it assumes no childcare, modest other debt and stable income. Many buyers on $100,000 are more comfortable in the $280,000–320,000 range, which leaves room to keep saving for retirement.
Good is relative to the current rate environment rather than any fixed number. What you can control is your position within the available range: a credit score above 740, a down payment of 20% or more, a debt-to-income ratio under 36%, and quotes from at least three lenders. That spread commonly covers 0.5 percentage points, which on a $400,000 loan is over $45,000 across 30 years.
Twenty percent eliminates PMI and secures better pricing, which is a guaranteed return. Keeping cash invested might earn more but might not. The stronger argument for a smaller down payment is timing — if reaching 20% takes three more years while prices and rents rise, the delay often costs more than the PMI would have. Whatever you choose, keep your emergency fund intact; a down payment that empties your savings turns a home into a liability.
It applies 0.55% of the loan amount annually whenever the down payment is under 20%, which sits in the middle of the typical 0.3%–1.5% range. Your actual rate depends on credit score, loan-to-value ratio and loan type — a 760 score with 15% down lands near the bottom of that range, while a 640 score with 5% down lands near the top. Your Loan Estimate will show the exact figure.
Compare the mortgage rate to your realistic after-tax investment return. At rates above roughly 6.5%, extra principal is competitive with expected equity returns and carries no risk. Below about 5%, investing usually wins over long horizons. The non-financial consideration matters too: a paid-off home substantially lowers your required income in retirement, which has value that a spreadsheet does not capture.
No — it models the ongoing monthly payment. Closing costs are a separate one-time expense of roughly 2–5% of the purchase price, covering origination, appraisal, title insurance, recording fees and prepaid escrow. On a $425,000 home that is typically $8,500–21,000, due at closing and separate from your down payment.
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