The formula
The principal-and-interest part uses the standard amortising formula on the amount actually borrowed, which is the home price minus the down payment. Property tax and homeowner's insurance are then spread evenly across twelve months and added on, which is how an escrowed payment is usually assembled.
Worked example
| Home price | Down payment | Rate / term | Tax + insurance / yr | Monthly total |
|---|---|---|---|---|
| $350,000 | $70,000 | 6.5% / 30 yr | $4,200 + $1,500 | $2,245.11 |
Of that total, $1,770.11 is principal and interest on the $280,000 borrowed, and $475.00 is the monthly share of tax and insurance.
A payment is not the full cost of buying
Closing costs, mortgage insurance on low down payments, HOA dues and maintenance never appear in this figure. The tax and insurance lines are also estimates you supply — real bills are set by the local assessor and the insurer, and both move from year to year.
Down payment changes the whole picture
A larger down payment does two things at once: it shrinks the amount borrowed, and it lowers the payment. It can also decide whether a lender requires mortgage insurance. Run the same house twice with different down payments to see the gap.
Related guides
Frequently asked questions
Why is my real payment different?
Lenders add mortgage insurance, HOA dues or their own escrow estimates. This tool only adds the tax and insurance amounts you type in.
Should I enter the rate as 6.5 or 0.065?
As 6.5. The field expects a percentage, not a decimal.
Does the term have to be 30 years?
No. Enter 15, 20 or whatever the quote says.