Advanced Mortgage Calculator.

Advanced Mortgage Calculator

Want to figure out your FULL actual mortgage cost including HOA fees, PMI, property taxes, homeowner's insurance & routine maintanence expenses? If so, you're in luck. This calculator does it all. You can even roll any loan origination or discount points into the loan. What's more, you can leverage current Ashburn mortgage rates to lock-in ongoing savings & estimate the value of your home at the end of your loan term.

See Expense Breakdown

Downpayment & Home Info Amount
Down payment:
The average downpayment on home purchases is around 10%. If the downpayment on a conventional mortgage is below 20% property mortgage insurance (PMI) is typically required to protect the lender against the risk of loss in the case of a default. FHA, USDA & VA loans allow lower downpayments.
Home Value:
The home sale price or appraised value of the home. It will be used to determine if PMI is needed on a conventional home loan.
$
Annual Appreciation:
Used to estimate future home value, home equity & LTV throughout your loan term.
%
Mortgage Details Amount
Loan Amount:
The loan amount is automatically calculated based on subtracting your downpayment from the value of the home.
$
Loan Term:
Most homebuyers across the United States choose a 30-year loan term. While roughly 90% go with a 30-year loan, other options are available including 10, 15 and 20 years. The 15-year is the next most popular choice after the 30-year term that dominates the market.
years
Start Date:
This enables us to generate your amortization charts.
Loan Purpose:
People buying a home should select purchase while people refinancing an existing loan should select refinance. Some lenders offer slightly lower rates to homeowners who are refinancing than to other borrowers. We also offer a cash out refinancing calculator.
Loan Type:
Most buyers choose conventional loans, though the government also sponsors a number of other loan programs. Active duty military members, retired veterans, and spouses of either are frequently eligible for VA-backed loans which do not require a down payment. Rural buyers may qualify for a USDA loan with no downpayment requirement. First-time buyers with low credit scores may qualify for a low downpayment FHA loan.
PMI:
Homebuyers who put down less than 20% on a conventional home loan are typically required to purchase property mortgage insurance. PMI typically costs 0.5% to 1% of the loan amount until the home's loan to value (LTV) falls below 78%.
%
Interest Rate:
This is the fixed annual percentage rate charged by the lender on a fixed-rate home loan. You can also compare fixed vs adjustable loans.
%
Closing Costs Amount
Discount Points:
Borrowers can "buy down" the interest rate using discount points. In some cases buyers may use negative points to lower the loan principal amount while paying a higher rate of interest.
Origination Points:
Many mortgage brokers or lenders charge fees to originate a loan. Roughly a 1% origination fee is quite common.
Other Closing Costs:
Some closing costs like title search, land surveying, appraisal & escrow are charged outside of the origination fee.
Finance Points & Closing?:
If you select yes these will be rolled into your home loan. If you select no they will not be included in your loan amount, but you will need to pay them upfront exclusive of the other downpayment you entered above.
Other Ownership Costs Amount
Annual Property Tax:
Property tax rates can vary widely based on state & county. Home values are also drastically different in various parts of the country, with many coastal areas costing much more than areas in the south or midwest.
$
Yearly Homeowner's Insurance:
Financed homes typically require insurance coverage. Eathquake and flooding insurance policies may be required as separate policies in some portions of the country.
$
Monthly HOA Fees:
If you are buying a condo or another type of home which has a homeowner's association which charges monthly dues to maintain common areas. Multi-unit dwellings which were not developed by the management team often have major issues come up around 7 to 10 years after they were built.
$
Annual Maintenance Cost:
A good rule of thumb is about 1% of the home's value, though individual homes can vary widely depending on age, condition, and local labor costs. Many new homes come with a 10-year warranty.
$
 
Output parameters »

Your $230000 Mortgage Summary

Lock-in Ashburn's Low Mortgage Rates Today

$230,000.00

Loan amount

$500.00

Closing costs

$1,503.01

Initial monthly payment

PMI

Not Needed

$100,000.00

Down payment amount

30.30%

Down payment %

Oct, 2051

Loan pay-off date

$200,082.56

Total Interest Paid

$208.33

Monthly Property Tax

$75,000.00

Total Property Tax

$100.00

Monthly Homeowners Insurance

$36,000.00

Total Homeowners Insurance

$200.00

Monthly Maintenance

$72,000.00

Total Maintenance Cost

$18,036.09

Total Annual Payment

$541,082.56

Total of 360 Payments

$514,129.25

Home Value in 15 Years

$800,996.62

Home Value in 30 Years

Current Ashburn 30-Year Mortgage Refinance Rates on a $230,000.00 Home Loan

The following table highlights locally available current mortgage rates. By default it is set to display the best mortgage refinance rates. Please click on the [Purchase] tab to see rates for purchase money mortgages. You can also select other loan terms from the Product drop down menu.

Monthly Versus Bi-weekly Payments

$1,303.01

Monthly Payment

$651.50

Bi-weekly Payment

Oct, 2051

Monthly Pay-off Date

Feb, 2048

Bi-weekly Pay-off Date

$128,082.56

Total Interest Paid

$110,675.77

Total Interest Paid
Total Interest Savings: $17,406.79

Annual Amortization Schedule for a 3.2% APR 30-YR $230,000.00 Mortgage

Year Interest Principal Balance Home Value Equity LTV
2021 $1,225.65 $763.70 $229,236.30 $331,629.75 $102,393.44 69.12%
2022 $7,267.48 $4,668.60 $224,567.70 $341,578.64 $117,010.94 65.74%
2023 $7,115.88 $4,820.21 $219,747.49 $351,826.00 $132,078.50 62.46%
2024 $6,959.35 $4,976.74 $214,770.76 $362,380.78 $147,610.02 59.27%
2025 $6,797.74 $5,138.35 $209,632.41 $373,252.20 $163,619.79 56.16%
2026 $6,630.88 $5,305.21 $204,327.20 $384,449.77 $180,122.57 53.15%
2027 $6,458.60 $5,477.49 $198,849.71 $395,983.26 $197,133.55 50.22%
2028 $6,280.72 $5,655.36 $193,194.35 $407,862.76 $214,668.41 47.37%
2029 $6,097.07 $5,839.01 $187,355.34 $420,098.64 $232,743.30 44.60%
2030 $5,907.46 $6,028.62 $181,326.71 $432,701.60 $251,374.89 41.91%
2031 $5,711.69 $6,224.40 $175,102.32 $445,682.65 $270,580.33 39.29%
2032 $5,509.56 $6,426.52 $168,675.80 $459,053.13 $290,377.33 36.74%
2033 $5,300.87 $6,635.22 $162,040.58 $472,824.72 $310,784.14 34.27%
2034 $5,085.40 $6,850.68 $155,189.90 $487,009.46 $331,819.56 31.87%
2035 $4,862.94 $7,073.15 $148,116.75 $501,619.75 $353,503.00 29.53%
2036 $4,633.25 $7,302.84 $140,813.91 $516,668.34 $375,854.43 27.25%
2037 $4,396.10 $7,539.99 $133,273.92 $532,168.39 $398,894.47 25.04%
2038 $4,151.25 $7,784.84 $125,489.08 $548,133.44 $422,644.36 22.89%
2039 $3,898.45 $8,037.64 $117,451.44 $564,577.44 $447,126.00 20.80%
2040 $3,637.43 $8,298.65 $109,152.79 $581,514.77 $472,361.98 18.77%
2041 $3,367.95 $8,568.14 $100,584.65 $598,960.21 $498,375.56 16.79%
2042 $3,089.71 $8,846.37 $91,738.28 $616,929.01 $525,190.74 14.87%
2043 $2,802.44 $9,133.65 $82,604.63 $635,436.89 $552,832.26 13.00%
2044 $2,505.84 $9,430.25 $73,174.38 $654,499.99 $581,325.61 11.18%
2045 $2,199.60 $9,736.48 $63,437.90 $674,134.99 $610,697.10 9.41%
2046 $1,883.42 $10,052.66 $53,385.23 $694,359.04 $640,973.81 7.69%
2047 $1,556.98 $10,379.11 $43,006.13 $715,189.81 $672,183.68 6.01%
2048 $1,219.93 $10,716.15 $32,289.98 $736,645.51 $704,355.53 4.38%
2049 $871.94 $11,064.14 $21,225.83 $758,744.87 $737,519.04 2.80%
2050 $512.65 $11,423.44 $9,802.40 $781,507.22 $771,704.82 1.25%
2051 $144.34 $9,802.40 $0.00 $800,996.62 $800,996.62 0.00%

Monthly Amortization Schedule for a 3.2% APR 30-YR $230,000.00 Mortgage

Month Interest Principal Balance Home Value Equity LTV
Nov, 2021 $613.33 $381.34 $229,618.66 $330,813.87 $101,195.21 69.41%
Dec, 2021 $612.32 $382.36 $229,236.30 $331,629.75 $102,393.44 69.12%
Jan, 2022 $611.30 $383.38 $228,852.93 $332,447.63 $103,594.71 68.84%
Feb, 2022 $610.27 $384.40 $228,468.53 $333,267.54 $104,799.01 68.55%
Mar, 2022 $609.25 $385.42 $228,083.10 $334,089.47 $106,006.37 68.27%
Apr, 2022 $608.22 $386.45 $227,696.65 $334,913.42 $107,216.77 67.99%
May, 2022 $607.19 $387.48 $227,309.17 $335,739.41 $108,430.24 67.70%
Jun, 2022 $606.16 $388.52 $226,920.65 $336,567.43 $109,646.78 67.42%
Jul, 2022 $605.12 $389.55 $226,531.10 $337,397.50 $110,866.40 67.14%
Aug, 2022 $604.08 $390.59 $226,140.51 $338,229.61 $112,089.10 66.86%
Sep, 2022 $603.04 $391.63 $225,748.88 $339,063.78 $113,314.90 66.58%
Oct, 2022 $602.00 $392.68 $225,356.20 $339,900.00 $114,543.80 66.30%
Nov, 2022 $600.95 $393.72 $224,962.47 $340,738.29 $115,775.81 66.02%
Dec, 2022 $599.90 $394.77 $224,567.70 $341,578.64 $117,010.94 65.74%
Jan, 2023 $598.85 $395.83 $224,171.87 $342,421.06 $118,249.19 65.47%
Feb, 2023 $597.79 $396.88 $223,774.99 $343,265.57 $119,490.57 65.19%
Mar, 2023 $596.73 $397.94 $223,377.05 $344,112.15 $120,735.10 64.91%
Apr, 2023 $595.67 $399.00 $222,978.05 $344,960.82 $121,982.77 64.64%
May, 2023 $594.61 $400.07 $222,577.98 $345,811.59 $123,233.61 64.36%
Jun, 2023 $593.54 $401.13 $222,176.85 $346,664.46 $124,487.60 64.09%
Jul, 2023 $592.47 $402.20 $221,774.65 $347,519.42 $125,744.77 63.82%
Aug, 2023 $591.40 $403.27 $221,371.37 $348,376.50 $127,005.13 63.54%
Sep, 2023 $590.32 $404.35 $220,967.02 $349,235.69 $128,268.67 63.27%
Oct, 2023 $589.25 $405.43 $220,561.60 $350,097.00 $129,535.40 63.00%
Nov, 2023 $588.16 $406.51 $220,155.09 $350,960.43 $130,805.35 62.73%
Dec, 2023 $587.08 $407.59 $219,747.49 $351,826.00 $132,078.50 62.46%
Jan, 2024 $585.99 $408.68 $219,338.81 $352,693.69 $133,354.88 62.19%
Feb, 2024 $584.90 $409.77 $218,929.04 $353,563.53 $134,634.49 61.92%
Mar, 2024 $583.81 $410.86 $218,518.18 $354,435.52 $135,917.34 61.65%
Apr, 2024 $582.72 $411.96 $218,106.22 $355,309.65 $137,203.43 61.38%
May, 2024 $581.62 $413.06 $217,693.16 $356,185.94 $138,492.77 61.12%
Jun, 2024 $580.52 $414.16 $217,279.00 $357,064.39 $139,785.38 60.85%
Jul, 2024 $579.41 $415.26 $216,863.74 $357,945.01 $141,081.26 60.59%
Aug, 2024 $578.30 $416.37 $216,447.37 $358,827.80 $142,380.42 60.32%
Sep, 2024 $577.19 $417.48 $216,029.89 $359,712.76 $143,682.87 60.06%
Oct, 2024 $576.08 $418.59 $215,611.30 $360,599.91 $144,988.61 59.79%
Nov, 2024 $574.96 $419.71 $215,191.59 $361,489.25 $146,297.66 59.53%
Dec, 2024 $573.84 $420.83 $214,770.76 $362,380.78 $147,610.02 59.27%
Jan, 2025 $572.72 $421.95 $214,348.80 $363,274.51 $148,925.70 59.00%
Feb, 2025 $571.60 $423.08 $213,925.73 $364,170.44 $150,244.71 58.74%
Mar, 2025 $570.47 $424.21 $213,501.52 $365,068.58 $151,567.06 58.48%
Apr, 2025 $569.34 $425.34 $213,076.19 $365,968.94 $152,892.75 58.22%
May, 2025 $568.20 $426.47 $212,649.72 $366,871.52 $154,221.80 57.96%
Jun, 2025 $567.07 $427.61 $212,222.11 $367,776.32 $155,554.21 57.70%
Jul, 2025 $565.93 $428.75 $211,793.36 $368,683.36 $156,890.00 57.45%
Aug, 2025 $564.78 $429.89 $211,363.47 $369,592.63 $158,229.16 57.19%
Sep, 2025 $563.64 $431.04 $210,932.43 $370,504.14 $159,571.71 56.93%
Oct, 2025 $562.49 $432.19 $210,500.24 $371,417.91 $160,917.66 56.67%
Nov, 2025 $561.33 $433.34 $210,066.90 $372,333.92 $162,267.02 56.42%
Dec, 2025 $560.18 $434.50 $209,632.41 $373,252.20 $163,619.79 56.16%
Jan, 2026 $559.02 $435.65 $209,196.75 $374,172.74 $164,975.99 55.91%
Feb, 2026 $557.86 $436.82 $208,759.94 $375,095.55 $166,335.61 55.66%
Mar, 2026 $556.69 $437.98 $208,321.96 $376,020.64 $167,698.68 55.40%
Apr, 2026 $555.53 $439.15 $207,882.81 $376,948.01 $169,065.20 55.15%
May, 2026 $554.35 $440.32 $207,442.49 $377,877.66 $170,435.17 54.90%
Jun, 2026 $553.18 $441.49 $207,001.00 $378,809.61 $171,808.62 54.65%
Jul, 2026 $552.00 $442.67 $206,558.32 $379,743.86 $173,185.53 54.39%
Aug, 2026 $550.82 $443.85 $206,114.47 $380,680.41 $174,565.94 54.14%
Sep, 2026 $549.64 $445.04 $205,669.44 $381,619.27 $175,949.83 53.89%
Oct, 2026 $548.45 $446.22 $205,223.22 $382,560.44 $177,337.23 53.64%
Nov, 2026 $547.26 $447.41 $204,775.80 $383,503.94 $178,728.14 53.40%
Dec, 2026 $546.07 $448.60 $204,327.20 $384,449.77 $180,122.57 53.15%
Jan, 2027 $544.87 $449.80 $203,877.40 $385,397.92 $181,520.53 52.90%
Feb, 2027 $543.67 $451.00 $203,426.40 $386,348.42 $182,922.02 52.65%
Mar, 2027 $542.47 $452.20 $202,974.19 $387,301.26 $184,327.06 52.41%
Apr, 2027 $541.26 $453.41 $202,520.78 $388,256.45 $185,735.66 52.16%
May, 2027 $540.06 $454.62 $202,066.17 $389,213.99 $187,147.83 51.92%
Jun, 2027 $538.84 $455.83 $201,610.33 $390,173.90 $188,563.56 51.67%
Jul, 2027 $537.63 $457.05 $201,153.29 $391,136.17 $189,982.88 51.43%
Aug, 2027 $536.41 $458.27 $200,695.02 $392,100.82 $191,405.80 51.18%
Sep, 2027 $535.19 $459.49 $200,235.54 $393,067.85 $192,832.31 50.94%
Oct, 2027 $533.96 $460.71 $199,774.82 $394,037.26 $194,262.43 50.70%
Nov, 2027 $532.73 $461.94 $199,312.88 $395,009.06 $195,696.18 50.46%
Dec, 2027 $531.50 $463.17 $198,849.71 $395,983.26 $197,133.55 50.22%
Jan, 2028 $530.27 $464.41 $198,385.30 $396,959.86 $198,574.56 49.98%
Feb, 2028 $529.03 $465.65 $197,919.66 $397,938.87 $200,019.21 49.74%
Mar, 2028 $527.79 $466.89 $197,452.77 $398,920.30 $201,467.53 49.50%
Apr, 2028 $526.54 $468.13 $196,984.63 $399,904.14 $202,919.51 49.26%
May, 2028 $525.29 $469.38 $196,515.25 $400,890.41 $204,375.16 49.02%
Jun, 2028 $524.04 $470.63 $196,044.62 $401,879.12 $205,834.50 48.78%
Jul, 2028 $522.79 $471.89 $195,572.73 $402,870.26 $207,297.53 48.54%
Aug, 2028 $521.53 $473.15 $195,099.59 $403,863.84 $208,764.26 48.31%
Sep, 2028 $520.27 $474.41 $194,625.18 $404,859.88 $210,234.70 48.07%
Oct, 2028 $519.00 $475.67 $194,149.50 $405,858.38 $211,708.87 47.84%
Nov, 2028 $517.73 $476.94 $193,672.56 $406,859.33 $213,186.77 47.60%
Dec, 2028 $516.46 $478.21 $193,194.35 $407,862.76 $214,668.41 47.37%
Jan, 2029 $515.18 $479.49 $192,714.86 $408,868.66 $216,153.80 47.13%
Feb, 2029 $513.91 $480.77 $192,234.09 $409,877.04 $217,642.94 46.90%
Mar, 2029 $512.62 $482.05 $191,752.04 $410,887.90 $219,135.86 46.67%
Apr, 2029 $511.34 $483.34 $191,268.71 $411,901.26 $220,632.56 46.44%
May, 2029 $510.05 $484.62 $190,784.08 $412,917.12 $222,133.04 46.20%
Jun, 2029 $508.76 $485.92 $190,298.17 $413,935.49 $223,637.32 45.97%
Jul, 2029 $507.46 $487.21 $189,810.96 $414,956.37 $225,145.41 45.74%
Aug, 2029 $506.16 $488.51 $189,322.44 $415,979.76 $226,657.32 45.51%
Sep, 2029 $504.86 $489.81 $188,832.63 $417,005.68 $228,173.05 45.28%
Oct, 2029 $503.55 $491.12 $188,341.51 $418,034.13 $229,692.62 45.05%
Nov, 2029 $502.24 $492.43 $187,849.08 $419,065.11 $231,216.03 44.83%
Dec, 2029 $500.93 $493.74 $187,355.34 $420,098.64 $232,743.30 44.60%
Jan, 2030 $499.61 $495.06 $186,860.28 $421,134.72 $234,274.44 44.37%
Feb, 2030 $498.29 $496.38 $186,363.90 $422,173.35 $235,809.45 44.14%
Mar, 2030 $496.97 $497.70 $185,866.20 $423,214.54 $237,348.35 43.92%
Apr, 2030 $495.64 $499.03 $185,367.16 $424,258.30 $238,891.14 43.69%
May, 2030 $494.31 $500.36 $184,866.80 $425,304.64 $240,437.83 43.47%
Jun, 2030 $492.98 $501.70 $184,365.11 $426,353.55 $241,988.45 43.24%
Jul, 2030 $491.64 $503.03 $183,862.07 $427,405.06 $243,542.98 43.02%
Aug, 2030 $490.30 $504.37 $183,357.70 $428,459.15 $245,101.45 42.79%
Sep, 2030 $488.95 $505.72 $182,851.98 $429,515.85 $246,663.87 42.57%
Oct, 2030 $487.61 $507.07 $182,344.91 $430,575.15 $248,230.24 42.35%
Nov, 2030 $486.25 $508.42 $181,836.49 $431,637.07 $249,800.58 42.13%
Dec, 2030 $484.90 $509.78 $181,326.71 $432,701.60 $251,374.89 41.91%
Jan, 2031 $483.54 $511.14 $180,815.58 $433,768.76 $252,953.18 41.68%
Feb, 2031 $482.17 $512.50 $180,303.08 $434,838.55 $254,535.47 41.46%
Mar, 2031 $480.81 $513.87 $179,789.21 $435,910.98 $256,121.76 41.24%
Apr, 2031 $479.44 $515.24 $179,273.98 $436,986.05 $257,712.07 41.03%
May, 2031 $478.06 $516.61 $178,757.37 $438,063.78 $259,306.41 40.81%
Jun, 2031 $476.69 $517.99 $178,239.38 $439,144.16 $260,904.78 40.59%
Jul, 2031 $475.31 $519.37 $177,720.01 $440,227.21 $262,507.20 40.37%
Aug, 2031 $473.92 $520.75 $177,199.26 $441,312.93 $264,113.67 40.15%
Sep, 2031 $472.53 $522.14 $176,677.11 $442,401.32 $265,724.21 39.94%
Oct, 2031 $471.14 $523.53 $176,153.58 $443,492.41 $267,338.83 39.72%
Nov, 2031 $469.74 $524.93 $175,628.65 $444,586.18 $268,957.53 39.50%
Dec, 2031 $468.34 $526.33 $175,102.32 $445,682.65 $270,580.33 39.29%
Jan, 2032 $466.94 $527.73 $174,574.58 $446,781.82 $272,207.24 39.07%
Feb, 2032 $465.53 $529.14 $174,045.44 $447,883.70 $273,838.26 38.86%
Mar, 2032 $464.12 $530.55 $173,514.89 $448,988.31 $275,473.42 38.65%
Apr, 2032 $462.71 $531.97 $172,982.92 $450,095.63 $277,112.71 38.43%
May, 2032 $461.29 $533.39 $172,449.54 $451,205.69 $278,756.15 38.22%
Jun, 2032 $459.87 $534.81 $171,914.73 $452,318.49 $280,403.76 38.01%
Jul, 2032 $458.44 $536.23 $171,378.49 $453,434.02 $282,055.53 37.80%
Aug, 2032 $457.01 $537.66 $170,840.83 $454,552.32 $283,711.49 37.58%
Sep, 2032 $455.58 $539.10 $170,301.73 $455,673.36 $285,371.63 37.37%
Oct, 2032 $454.14 $540.54 $169,761.20 $456,797.18 $287,035.98 37.16%
Nov, 2032 $452.70 $541.98 $169,219.22 $457,923.76 $288,704.54 36.95%
Dec, 2032 $451.25 $543.42 $168,675.80 $459,053.13 $290,377.33 36.74%
Jan, 2033 $449.80 $544.87 $168,130.92 $460,185.27 $292,054.35 36.54%
Feb, 2033 $448.35 $546.32 $167,584.60 $461,320.22 $293,735.62 36.33%
Mar, 2033 $446.89 $547.78 $167,036.82 $462,457.96 $295,421.14 36.12%
Apr, 2033 $445.43 $549.24 $166,487.58 $463,598.50 $297,110.93 35.91%
May, 2033 $443.97 $550.71 $165,936.87 $464,741.86 $298,804.99 35.71%
Jun, 2033 $442.50 $552.18 $165,384.69 $465,888.04 $300,503.35 35.50%
Jul, 2033 $441.03 $553.65 $164,831.04 $467,037.05 $302,206.00 35.29%
Aug, 2033 $439.55 $555.12 $164,275.92 $468,188.88 $303,912.96 35.09%
Sep, 2033 $438.07 $556.60 $163,719.32 $469,343.56 $305,624.25 34.88%
Oct, 2033 $436.58 $558.09 $163,161.23 $470,501.09 $307,339.87 34.68%
Nov, 2033 $435.10 $559.58 $162,601.65 $471,661.48 $309,059.83 34.47%
Dec, 2033 $433.60 $561.07 $162,040.58 $472,824.72 $310,784.14 34.27%
Jan, 2034 $432.11 $562.57 $161,478.01 $473,990.83 $312,512.82 34.07%
Feb, 2034 $430.61 $564.07 $160,913.95 $475,159.82 $314,245.87 33.87%
Mar, 2034 $429.10 $565.57 $160,348.38 $476,331.69 $315,983.32 33.66%
Apr, 2034 $427.60 $567.08 $159,781.30 $477,506.46 $317,725.16 33.46%
May, 2034 $426.08 $568.59 $159,212.71 $478,684.12 $319,471.41 33.26%
Jun, 2034 $424.57 $570.11 $158,642.60 $479,864.68 $321,222.08 33.06%
Jul, 2034 $423.05 $571.63 $158,070.98 $481,048.16 $322,977.18 32.86%
Aug, 2034 $421.52 $573.15 $157,497.83 $482,234.55 $324,736.73 32.66%
Sep, 2034 $419.99 $574.68 $156,923.15 $483,423.87 $326,500.73 32.46%
Oct, 2034 $418.46 $576.21 $156,346.93 $484,616.13 $328,269.19 32.26%
Nov, 2034 $416.93 $577.75 $155,769.19 $485,811.32 $330,042.13 32.06%
Dec, 2034 $415.38 $579.29 $155,189.90 $487,009.46 $331,819.56 31.87%
Jan, 2035 $413.84 $580.83 $154,609.06 $488,210.56 $333,601.50 31.67%
Feb, 2035 $412.29 $582.38 $154,026.68 $489,414.62 $335,387.94 31.47%
Mar, 2035 $410.74 $583.94 $153,442.74 $490,621.65 $337,178.90 31.28%
Apr, 2035 $409.18 $585.49 $152,857.25 $491,831.65 $338,974.40 31.08%
May, 2035 $407.62 $587.05 $152,270.20 $493,044.64 $340,774.44 30.88%
Jun, 2035 $406.05 $588.62 $151,681.58 $494,260.62 $342,579.05 30.69%
Jul, 2035 $404.48 $590.19 $151,091.39 $495,479.60 $344,388.22 30.49%
Aug, 2035 $402.91 $591.76 $150,499.62 $496,701.59 $346,201.96 30.30%
Sep, 2035 $401.33 $593.34 $149,906.28 $497,926.59 $348,020.31 30.11%
Oct, 2035 $399.75 $594.92 $149,311.36 $499,154.61 $349,843.25 29.91%
Nov, 2035 $398.16 $596.51 $148,714.85 $500,385.66 $351,670.81 29.72%
Dec, 2035 $396.57 $598.10 $148,116.75 $501,619.75 $353,503.00 29.53%
Jan, 2036 $394.98 $599.70 $147,517.05 $502,856.87 $355,339.82 29.34%
Feb, 2036 $393.38 $601.29 $146,915.76 $504,097.06 $357,181.30 29.14%
Mar, 2036 $391.78 $602.90 $146,312.86 $505,340.29 $359,027.44 28.95%
Apr, 2036 $390.17 $604.51 $145,708.35 $506,586.60 $360,878.25 28.76%
May, 2036 $388.56 $606.12 $145,102.23 $507,835.98 $362,733.75 28.57%
Jun, 2036 $386.94 $607.73 $144,494.50 $509,088.44 $364,593.94 28.38%
Jul, 2036 $385.32 $609.36 $143,885.14 $510,343.99 $366,458.85 28.19%
Aug, 2036 $383.69 $610.98 $143,274.16 $511,602.64 $368,328.47 28.00%
Sep, 2036 $382.06 $612.61 $142,661.55 $512,864.39 $370,202.83 27.82%
Oct, 2036 $380.43 $614.24 $142,047.31 $514,129.25 $372,081.94 27.63%
Nov, 2036 $378.79 $615.88 $141,431.43 $515,397.23 $373,965.80 27.44%
Dec, 2036 $377.15 $617.52 $140,813.91 $516,668.34 $375,854.43 27.25%
Jan, 2037 $375.50 $619.17 $140,194.74 $517,942.58 $377,747.84 27.07%
Feb, 2037 $373.85 $620.82 $139,573.92 $519,219.97 $379,646.05 26.88%
Mar, 2037 $372.20 $622.48 $138,951.44 $520,500.50 $381,549.06 26.70%
Apr, 2037 $370.54 $624.14 $138,327.30 $521,784.20 $383,456.90 26.51%
May, 2037 $368.87 $625.80 $137,701.50 $523,071.06 $385,369.56 26.33%
Jun, 2037 $367.20 $627.47 $137,074.03 $524,361.09 $387,287.06 26.14%
Jul, 2037 $365.53 $629.14 $136,444.89 $525,654.31 $389,209.42 25.96%
Aug, 2037 $363.85 $630.82 $135,814.07 $526,950.71 $391,136.65 25.77%
Sep, 2037 $362.17 $632.50 $135,181.56 $528,250.32 $393,068.75 25.59%
Oct, 2037 $360.48 $634.19 $134,547.38 $529,553.12 $395,005.75 25.41%
Nov, 2037 $358.79 $635.88 $133,911.49 $530,859.15 $396,947.65 25.23%
Dec, 2037 $357.10 $637.58 $133,273.92 $532,168.39 $398,894.47 25.04%
Jan, 2038 $355.40 $639.28 $132,634.64 $533,480.86 $400,846.22 24.86%
Feb, 2038 $353.69 $640.98 $131,993.66 $534,796.57 $402,802.91 24.68%
Mar, 2038 $351.98 $642.69 $131,350.97 $536,115.52 $404,764.55 24.50%
Apr, 2038 $350.27 $644.40 $130,706.56 $537,437.72 $406,731.16 24.32%
May, 2038 $348.55 $646.12 $130,060.44 $538,763.19 $408,702.75 24.14%
Jun, 2038 $346.83 $647.85 $129,412.60 $540,091.93 $410,679.33 23.96%
Jul, 2038 $345.10 $649.57 $128,763.02 $541,423.94 $412,660.92 23.78%
Aug, 2038 $343.37 $651.31 $128,111.72 $542,759.24 $414,647.52 23.60%
Sep, 2038 $341.63 $653.04 $127,458.67 $544,097.83 $416,639.15 23.43%
Oct, 2038 $339.89 $654.78 $126,803.89 $545,439.72 $418,635.83 23.25%
Nov, 2038 $338.14 $656.53 $126,147.36 $546,784.92 $420,637.56 23.07%
Dec, 2038 $336.39 $658.28 $125,489.08 $548,133.44 $422,644.36 22.89%
Jan, 2039 $334.64 $660.04 $124,829.04 $549,485.28 $424,656.24 22.72%
Feb, 2039 $332.88 $661.80 $124,167.25 $550,840.46 $426,673.22 22.54%
Mar, 2039 $331.11 $663.56 $123,503.69 $552,198.98 $428,695.30 22.37%
Apr, 2039 $329.34 $665.33 $122,838.35 $553,560.86 $430,722.50 22.19%
May, 2039 $327.57 $667.10 $122,171.25 $554,926.09 $432,754.84 22.02%
Jun, 2039 $325.79 $668.88 $121,502.37 $556,294.68 $434,792.32 21.84%
Jul, 2039 $324.01 $670.67 $120,831.70 $557,666.66 $436,834.96 21.67%
Aug, 2039 $322.22 $672.46 $120,159.24 $559,042.01 $438,882.77 21.49%
Sep, 2039 $320.42 $674.25 $119,484.99 $560,420.76 $440,935.77 21.32%
Oct, 2039 $318.63 $676.05 $118,808.95 $561,802.91 $442,993.96 21.15%
Nov, 2039 $316.82 $677.85 $118,131.10 $563,188.47 $445,057.37 20.98%
Dec, 2039 $315.02 $679.66 $117,451.44 $564,577.44 $447,126.00 20.80%
Jan, 2040 $313.20 $681.47 $116,769.97 $565,969.84 $449,199.87 20.63%
Feb, 2040 $311.39 $683.29 $116,086.68 $567,365.68 $451,279.00 20.46%
Mar, 2040 $309.56 $685.11 $115,401.57 $568,764.95 $453,363.38 20.29%
Apr, 2040 $307.74 $686.94 $114,714.64 $570,167.68 $455,453.05 20.12%
May, 2040 $305.91 $688.77 $114,025.87 $571,573.87 $457,548.00 19.95%
Jun, 2040 $304.07 $690.60 $113,335.26 $572,983.52 $459,648.26 19.78%
Jul, 2040 $302.23 $692.45 $112,642.82 $574,396.66 $461,753.84 19.61%
Aug, 2040 $300.38 $694.29 $111,948.52 $575,813.27 $463,864.75 19.44%
Sep, 2040 $298.53 $696.14 $111,252.38 $577,233.38 $465,981.00 19.27%
Oct, 2040 $296.67 $698.00 $110,554.38 $578,657.00 $468,102.62 19.11%
Nov, 2040 $294.81 $699.86 $109,854.52 $580,084.12 $470,229.61 18.94%
Dec, 2040 $292.95 $701.73 $109,152.79 $581,514.77 $472,361.98 18.77%
Jan, 2041 $291.07 $703.60 $108,449.19 $582,948.94 $474,499.75 18.60%
Feb, 2041 $289.20 $705.48 $107,743.71 $584,386.65 $476,642.93 18.44%
Mar, 2041 $287.32 $707.36 $107,036.36 $585,827.90 $478,791.55 18.27%
Apr, 2041 $285.43 $709.24 $106,327.11 $587,272.71 $480,945.60 18.11%
May, 2041 $283.54 $711.13 $105,615.98 $588,721.09 $483,105.11 17.94%
Jun, 2041 $281.64 $713.03 $104,902.95 $590,173.03 $485,270.08 17.77%
Jul, 2041 $279.74 $714.93 $104,188.01 $591,628.56 $487,440.54 17.61%
Aug, 2041 $277.83 $716.84 $103,471.17 $593,087.67 $489,616.50 17.45%
Sep, 2041 $275.92 $718.75 $102,752.42 $594,550.39 $491,797.96 17.28%
Oct, 2041 $274.01 $720.67 $102,031.76 $596,016.71 $493,984.95 17.12%
Nov, 2041 $272.08 $722.59 $101,309.17 $597,486.65 $496,177.48 16.96%
Dec, 2041 $270.16 $724.52 $100,584.65 $598,960.21 $498,375.56 16.79%
Jan, 2042 $268.23 $726.45 $99,858.20 $600,437.41 $500,579.20 16.63%
Feb, 2042 $266.29 $728.39 $99,129.82 $601,918.25 $502,788.43 16.47%
Mar, 2042 $264.35 $730.33 $98,399.49 $603,402.74 $505,003.25 16.31%
Apr, 2042 $262.40 $732.28 $97,667.21 $604,890.89 $507,223.68 16.15%
May, 2042 $260.45 $734.23 $96,932.99 $606,382.72 $509,449.73 15.99%
Jun, 2042 $258.49 $736.19 $96,196.80 $607,878.22 $511,681.42 15.83%
Jul, 2042 $256.52 $738.15 $95,458.65 $609,377.41 $513,918.76 15.66%
Aug, 2042 $254.56 $740.12 $94,718.53 $610,880.30 $516,161.77 15.51%
Sep, 2042 $252.58 $742.09 $93,976.44 $612,386.90 $518,410.45 15.35%
Oct, 2042 $250.60 $744.07 $93,232.37 $613,897.21 $520,664.83 15.19%
Nov, 2042 $248.62 $746.05 $92,486.32 $615,411.24 $522,924.93 15.03%
Dec, 2042 $246.63 $748.04 $91,738.28 $616,929.01 $525,190.74 14.87%
Jan, 2043 $244.64 $750.04 $90,988.24 $618,450.53 $527,462.29 14.71%
Feb, 2043 $242.64 $752.04 $90,236.20 $619,975.79 $529,739.59 14.55%
Mar, 2043 $240.63 $754.04 $89,482.16 $621,504.82 $532,022.67 14.40%
Apr, 2043 $238.62 $756.05 $88,726.10 $623,037.62 $534,311.52 14.24%
May, 2043 $236.60 $758.07 $87,968.03 $624,574.20 $536,606.17 14.08%
Jun, 2043 $234.58 $760.09 $87,207.94 $626,114.57 $538,906.63 13.93%
Jul, 2043 $232.55 $762.12 $86,445.82 $627,658.74 $541,212.92 13.77%
Aug, 2043 $230.52 $764.15 $85,681.67 $629,206.71 $543,525.04 13.62%
Sep, 2043 $228.48 $766.19 $84,915.48 $630,758.50 $545,843.03 13.46%
Oct, 2043 $226.44 $768.23 $84,147.24 $632,314.12 $548,166.88 13.31%
Nov, 2043 $224.39 $770.28 $83,376.96 $633,873.58 $550,496.62 13.15%
Dec, 2043 $222.34 $772.34 $82,604.63 $635,436.89 $552,832.26 13.00%
Jan, 2044 $220.28 $774.39 $81,830.23 $637,004.04 $555,173.81 12.85%
Feb, 2044 $218.21 $776.46 $81,053.77 $638,575.07 $557,521.29 12.69%
Mar, 2044 $216.14 $778.53 $80,275.24 $640,149.97 $559,874.72 12.54%
Apr, 2044 $214.07 $780.61 $79,494.64 $641,728.75 $562,234.11 12.39%
May, 2044 $211.99 $782.69 $78,711.95 $643,311.43 $564,599.48 12.24%
Jun, 2044 $209.90 $784.78 $77,927.17 $644,898.00 $566,970.83 12.08%
Jul, 2044 $207.81 $786.87 $77,140.31 $646,488.50 $569,348.19 11.93%
Aug, 2044 $205.71 $788.97 $76,351.34 $648,082.91 $571,731.57 11.78%
Sep, 2044 $203.60 $791.07 $75,560.27 $649,681.26 $574,120.99 11.63%
Oct, 2044 $201.49 $793.18 $74,767.09 $651,283.55 $576,516.46 11.48%
Nov, 2044 $199.38 $795.29 $73,971.79 $652,889.79 $578,918.00 11.33%
Dec, 2044 $197.26 $797.42 $73,174.38 $654,499.99 $581,325.61 11.18%
Jan, 2045 $195.13 $799.54 $72,374.84 $656,114.17 $583,739.33 11.03%
Feb, 2045 $193.00 $801.67 $71,573.16 $657,732.32 $586,159.16 10.88%
Mar, 2045 $190.86 $803.81 $70,769.35 $659,354.47 $588,585.12 10.73%
Apr, 2045 $188.72 $805.96 $69,963.39 $660,980.61 $591,017.22 10.58%
May, 2045 $186.57 $808.10 $69,155.29 $662,610.77 $593,455.48 10.44%
Jun, 2045 $184.41 $810.26 $68,345.03 $664,244.94 $595,899.91 10.29%
Jul, 2045 $182.25 $812.42 $67,532.61 $665,883.15 $598,350.54 10.14%
Aug, 2045 $180.09 $814.59 $66,718.02 $667,525.40 $600,807.38 9.99%
Sep, 2045 $177.91 $816.76 $65,901.26 $669,171.70 $603,270.43 9.85%
Oct, 2045 $175.74 $818.94 $65,082.33 $670,822.06 $605,739.73 9.70%
Nov, 2045 $173.55 $821.12 $64,261.21 $672,476.48 $608,215.28 9.56%
Dec, 2045 $171.36 $823.31 $63,437.90 $674,134.99 $610,697.10 9.41%
Jan, 2046 $169.17 $825.51 $62,612.39 $675,797.59 $613,185.20 9.26%
Feb, 2046 $166.97 $827.71 $61,784.68 $677,464.29 $615,679.61 9.12%
Mar, 2046 $164.76 $829.91 $60,954.77 $679,135.10 $618,180.33 8.98%
Apr, 2046 $162.55 $832.13 $60,122.64 $680,810.03 $620,687.39 8.83%
May, 2046 $160.33 $834.35 $59,288.29 $682,489.09 $623,200.80 8.69%
Jun, 2046 $158.10 $836.57 $58,451.72 $684,172.29 $625,720.57 8.54%
Jul, 2046 $155.87 $838.80 $57,612.92 $685,859.65 $628,246.73 8.40%
Aug, 2046 $153.63 $841.04 $56,771.88 $687,551.16 $630,779.28 8.26%
Sep, 2046 $151.39 $843.28 $55,928.60 $689,246.85 $633,318.25 8.11%
Oct, 2046 $149.14 $845.53 $55,083.07 $690,946.72 $635,863.65 7.97%
Nov, 2046 $146.89 $847.79 $54,235.28 $692,650.78 $638,415.50 7.83%
Dec, 2046 $144.63 $850.05 $53,385.23 $694,359.04 $640,973.81 7.69%
Jan, 2047 $142.36 $852.31 $52,532.92 $696,071.52 $643,538.60 7.55%
Feb, 2047 $140.09 $854.59 $51,678.34 $697,788.22 $646,109.88 7.41%
Mar, 2047 $137.81 $856.86 $50,821.47 $699,509.15 $648,687.68 7.27%
Apr, 2047 $135.52 $859.15 $49,962.32 $701,234.33 $651,272.01 7.12%
May, 2047 $133.23 $861.44 $49,100.88 $702,963.76 $653,862.88 6.98%
Jun, 2047 $130.94 $863.74 $48,237.14 $704,697.46 $656,460.32 6.85%
Jul, 2047 $128.63 $866.04 $47,371.10 $706,435.44 $659,064.34 6.71%
Aug, 2047 $126.32 $868.35 $46,502.75 $708,177.70 $661,674.95 6.57%
Sep, 2047 $124.01 $870.67 $45,632.08 $709,924.25 $664,292.17 6.43%
Oct, 2047 $121.69 $872.99 $44,759.09 $711,675.12 $666,916.02 6.29%
Nov, 2047 $119.36 $875.32 $43,883.78 $713,430.30 $669,546.52 6.15%
Dec, 2047 $117.02 $877.65 $43,006.13 $715,189.81 $672,183.68 6.01%
Jan, 2048 $114.68 $879.99 $42,126.14 $716,953.66 $674,827.53 5.88%
Feb, 2048 $112.34 $882.34 $41,243.80 $718,721.86 $677,478.07 5.74%
Mar, 2048 $109.98 $884.69 $40,359.11 $720,494.43 $680,135.32 5.60%
Apr, 2048 $107.62 $887.05 $39,472.06 $722,271.36 $682,799.30 5.46%
May, 2048 $105.26 $889.41 $38,582.64 $724,052.68 $685,470.03 5.33%
Jun, 2048 $102.89 $891.79 $37,690.86 $725,838.39 $688,147.53 5.19%
Jul, 2048 $100.51 $894.16 $36,796.69 $727,628.50 $690,831.81 5.06%
Aug, 2048 $98.12 $896.55 $35,900.14 $729,423.03 $693,522.88 4.92%
Sep, 2048 $95.73 $898.94 $35,001.20 $731,221.98 $696,220.78 4.79%
Oct, 2048 $93.34 $901.34 $34,099.87 $733,025.37 $698,925.51 4.65%
Nov, 2048 $90.93 $903.74 $33,196.13 $734,833.21 $701,637.08 4.52%
Dec, 2048 $88.52 $906.15 $32,289.98 $736,645.51 $704,355.53 4.38%
Jan, 2049 $86.11 $908.57 $31,381.41 $738,462.27 $707,080.87 4.25%
Feb, 2049 $83.68 $910.99 $30,470.42 $740,283.52 $709,813.10 4.12%
Mar, 2049 $81.25 $913.42 $29,557.00 $742,109.26 $712,552.26 3.98%
Apr, 2049 $78.82 $915.86 $28,641.14 $743,939.50 $715,298.36 3.85%
May, 2049 $76.38 $918.30 $27,722.85 $745,774.26 $718,051.41 3.72%
Jun, 2049 $73.93 $920.75 $26,802.10 $747,613.54 $720,811.44 3.59%
Jul, 2049 $71.47 $923.20 $25,878.90 $749,457.35 $723,578.46 3.45%
Aug, 2049 $69.01 $925.66 $24,953.23 $751,305.72 $726,352.48 3.32%
Sep, 2049 $66.54 $928.13 $24,025.10 $753,158.64 $729,133.54 3.19%
Oct, 2049 $64.07 $930.61 $23,094.50 $755,016.13 $731,921.64 3.06%
Nov, 2049 $61.59 $933.09 $22,161.41 $756,878.21 $734,716.80 2.93%
Dec, 2049 $59.10 $935.58 $21,225.83 $758,744.87 $737,519.04 2.80%
Jan, 2050 $56.60 $938.07 $20,287.76 $760,616.14 $740,328.38 2.67%
Feb, 2050 $54.10 $940.57 $19,347.19 $762,492.03 $743,144.84 2.54%
Mar, 2050 $51.59 $943.08 $18,404.11 $764,372.54 $745,968.43 2.41%
Apr, 2050 $49.08 $945.60 $17,458.51 $766,257.69 $748,799.18 2.28%
May, 2050 $46.56 $948.12 $16,510.39 $768,147.48 $751,637.09 2.15%
Jun, 2050 $44.03 $950.65 $15,559.75 $770,041.94 $754,482.20 2.02%
Jul, 2050 $41.49 $953.18 $14,606.56 $771,941.07 $757,334.51 1.89%
Aug, 2050 $38.95 $955.72 $13,650.84 $773,844.89 $760,194.05 1.76%
Sep, 2050 $36.40 $958.27 $12,692.57 $775,753.40 $763,060.83 1.64%
Oct, 2050 $33.85 $960.83 $11,731.74 $777,666.62 $765,934.87 1.51%
Nov, 2050 $31.28 $963.39 $10,768.35 $779,584.55 $768,816.20 1.38%
Dec, 2050 $28.72 $965.96 $9,802.40 $781,507.22 $771,704.82 1.25%
Jan, 2051 $26.14 $968.53 $8,833.86 $783,434.63 $774,600.77 1.13%
Feb, 2051 $23.56 $971.12 $7,862.74 $785,366.79 $777,504.04 1.00%
Mar, 2051 $20.97 $973.71 $6,889.04 $787,303.71 $780,414.68 0.88%
Apr, 2051 $18.37 $976.30 $5,912.73 $789,245.42 $783,332.68 0.75%
May, 2051 $15.77 $978.91 $4,933.83 $791,191.91 $786,258.08 0.62%
Jun, 2051 $13.16 $981.52 $3,952.31 $793,143.20 $789,190.89 0.50%
Jul, 2051 $10.54 $984.13 $2,968.18 $795,099.31 $792,131.13 0.37%
Aug, 2051 $7.92 $986.76 $1,981.42 $797,060.24 $795,078.82 0.25%
Sep, 2051 $5.28 $989.39 $992.03 $799,026.00 $798,033.97 0.12%
Oct, 2051 $2.65 $992.03 $0.00 $800,996.62 $800,996.62 0.00%

Fantastic Helpful Features for Home Buyers

This free advanced home loan payment calculation tool contains the features you would expect in a basic mortgage calculator, and a number of helpful in-depth features, including:

  • graphs of the outstanding loan balance and payment amortization components
  • a repayment pie chart
  • printable monthly and yearly amortization schedules which also contain estimated home value during each period, along with the current equity and the remaining loan to value ratio upon each payment
  • a side by side comparison of biweekly vs monthly payments
  • Property Mortgage Insurance (PMI) and real estate taxes

Want a Basic Calculator?

And if you are looking for a basic calculation tool you can turn any of the above mentioned advanced features off.

  • set PMI, property taxes, and home owner's insurance to zero
  • from the "output parameters" menu uncheck the chart drawing, bi-weekly, and amortization table options

Alternatively, you can use our simplified basic mortgage calculator to view P&I payments without all the other extra details.

Understanding PITI and How It Impacts Your Mortgage Expenses

Finally purchasing a home is a milestone for most people. And though it’s an exciting point in your life, navigating the mortgage market can be an overwhelming process. It’s confusing, especially if you’re not familiar with market lingo and how mortgages work.

If you’re a first-time homebuyer, you probably asked what PITI stands for. PITI is an acronym that means principal, interest, taxes, and insurance. PITI, along with other terms such as debt-to-income ratio and APR, are concepts you need to learn before securing a mortgage. Learning about these factors will help you make better financial choices before you seal your real estate deal.

This guide will explain the different components of PITI and why it matters when you take your mortgage. We’ll discuss what principal and interest is and how they work, as well as property taxes and mortgages insurance. Then, we’ll show you how to calculate your PITI using the above calculator.

What is PITI?

PITI is comprised of key components that make up your total monthly mortgage payment. It’s an acronym that stands for Principal, Interest, Taxes, and Insurance. When you pay your monthly mortgage, you’re not just paying back the loan amount and interest in installments. Besides the principal and interest, it factors in other housing-related costs such as property taxes and mortgage insurance. Adding PITI shows the true cost of your monthly mortgage payment.

Why is PITI Important?

Real estate agent explaining costs to buyers.

When you apply for a mortgage, banks don’t just lend an unlimited amount. Lenders use PITI to determine how much you are qualified to borrow. To make sure they offer a loan amount you can pay back, lenders evaluate your debt-to-income ratio (DTI). DTI ratio is the amount of debt you have relative to your income, which is calculated by dividing your total monthly debts with your gross monthly income. Expressed as a percentage, it’s a risk measurement standard that shows whether you have enough income to afford mortgage payments.

Having a very high DTI ratio indicates a borrower is overleveraged, which means they cannot afford to take on more debt. As a result, the mortgage application will not be approved. Meanwhile, borrowers who are approved despite a high DTI ratio typically receive high interest rates.

According to the Consumer Financial Protection Bureau (CFPB), studies show that people with higher DTI ratios are likely to have trouble making monthly payments. To obtain a qualified mortgage, a borrower’s back-end DTI ratio must not be higher than 43%. But if you want to secure the best rate, it’s important to keep your DTI ratio lower. Thus, maintaining a lower DTI ratio increases your chances of securing mortgage approval.

Lenders Assess 2 Main DTI Ratios:

Front-end DTI ratio – This represents the percentage of your housing-related expenses in comparison to your gross monthly income. It’s comprised of your PITI costs, which includes your principal and interest payments, property taxes, mortgage insurance, homeowner’s association dues, etc. For most conventional loans, the front-end DTI should not be higher than 28%.

Back-end DTI ratio – This ratio calculates your PITI costs together with all your other debts. It includes car loans, credit card debts, student loans, etc. Most conventional lenders prefer a back-end DTI ratio no higher than of 36%. But depending on the strength of your credit, lenders accept up to 43%. Others allow up to 50% if you have compensating factors such as student loans, or if you can make a higher down payment.

 

For more details about required DTI limits including government-backed mortgages, such as FHA loans, VA loans, and USDA loans, refer to the following chart below. In general, lenders place more importance on back-end DTI ratio than front-end DTI ratio, because it incorporates all other debt obligations besides mortgage-related costs. If you have a high back-end DTI ratio, be sure to reduce it before applying for a mortgage. Homebuyers with back-end DTI of over 40% typically receive much higher interest rates than those with lower back-end DTI.

Loan TypeFront-endBack-endHard LimitNotes
Recommended28%36%n/aExemplary borrower, receives better APR. Meanwhile, a higher DTI results in a higher rate.
Conventional28%36% to 43%45% to 50%Each lender is approved based on many factors such as credit score, income & assets, credit history, etc.
FHA31%43%57%Approval with high DTI requires compensating factors. For example, if your DTI is over 43%, a lender might need a higher down payment.
VAmost lenders refer to the back-end DTI ratio41%~ 47%Each lender decides based on a variety of factors for each veteran. Lenders must justify why they approve any loan above a 41% limit. Basic housing & sustenance allowance count toward approval.
USDA29% – 32%41%41%Loans made for borrowers in rural markets with incomes under 115% of the local median income. See more details here.

For the soft back-end limits, borrowers may be granted approval using automated underwriting systems. On the other hand, applying with a hard limit requires manual underwriting together with compensating factors. This means you must have a high credit score, larger down payment, or a co-signer to secure loan approval. If you have a low income and insufficient credit score, try applying for government backed-mortgages. These financing options typically provide tolerant credit standards and lower down payments.

PITI and Mortgage Reserves

Lenders also use PITI to determine mortgage reserve requirements. A month’s reserve is equivalent to your PITI. Lenders require at least 2 months’ worth of mortgage reserves to secure your loan, though others may demand up to 6 months of reserves. For example, if your monthly PITI is $1,300 and your lender requires 2 months of reserves, you must show you have $2,600 in your savings account before they approve the loan.

Mortgage reserves are used as emergency funds in case you face sudden loss in income. This may be due to an illness, job loss, or other aggravating circumstances. Having ample mortgage reserves assure lenders you can keep making payments in case of financial hurdles.

Examining Factors That Comprise PITI

Real estate agent explaining contract to buyers.

To further understand the different components of PITI, the following sections will discuss them in detail:

Principal

The principal is the loan amount or the money you borrowed to purchase your home. This also depends on how much your lender is willing to loan. For instance, if you buy a house worth $320,000 and make a 20% down payment ($64,000), your principal amount would be $256,000. If you adjust your down payment to 10% ($32,000), your principal amount will increase to $288,000. If your approved loan amount is $288,000, you have the option to borrow the full amount or take a lower loan amount.

Generally, the larger the principal, the higher your monthly mortgage payment. Borrowing a larger principal amount also accumulates higher interest charges over the life of the loan. Thus, between a principal of $256,000 and $288,000, you’ll have a lower monthly payment if you only borrow $256,000. Choosing a lower principal will also save you more on interest costs.

Mortgage Payment Distribution

Principal and interest are two major components of your monthly mortgage payment. When you take a fixed-rate loan, it typically follows a traditional amortization schedule. This details the exact number of payments you need to make on your mortgage. For instance, a 30-year fixed-rate mortgage comes with 360 payments spread throughout 30 years, while a 15-year fixed mortgage has 180 payments distributed across 15 years. The amortization schedule also shows how much of your payment goes toward the principal and interest each month.

During the first several years of your loan, a smaller portion of your mortgage payments go to your principal, while most of your payments go toward the interest. Since your principal is largest during the first years of the mortgage, it accrues the largest interest charges. But over the years, payments toward interest decrease as your principal amount is reduced. By the latter years of your loan, more of your payments go toward paying off your principal. And as long as you keep paying your mortgage as scheduled, your loan should be paid off within the agreed term.

Interest

Interest is the fee charged by lenders to service loans. Borrowers are charged a certain amount of interest throughout the life of the mortgage, which is referred to as annual percentage rate (APR). You pay interest every pay period as you make monthly mortgage payments. If a borrower chooses a fixed-rate mortgage, the amount of interest will remain the same for the entire loan duration. This makes it easier to plan your monthly budget without worrying about increasing payments. 

On the other hand, if you obtain an adjustable-rate mortgage (ARM), expect your interest rate to change periodically. This means you must be ready for increasing mortgage payments when market rates rise. However, depending on general market conditions, when ARMs have a lower introductory rate compared to fixed-rate loans, borrowers may be inclined to take an ARM. But to secure a locked rate, they eventually refinance into a fixed-rate loan. Since predictable payments are more appealing, most homebuyers choose fixed-rate mortgages over ARMs.

Mortgage rates are determined by many different factors. While it depends on current market rates, your mortgage rate largely depends on the strength of your credit profile. Borrowers with a higher credit score of 700 typically receive more favorable rates than those with lower credit. Meanwhile, the lower your credit score, the higher interest rate you’ll receive.

The length of your payment term also determines your rate. Note that extended fixed terms have higher rates than shorter terms. 30-year fixed mortgage rates are higher by 0.25% to 1% than 15-year fixed-rate loans. However, shorter rates come with much more expensive monthly mortgage payments. As a result, more homebuyers tend to choose 30-year fixed mortgages.

The following chart shows average mortgage rates for different types of loans as of January 21, 2021. It includes fixed-rate mortgages and adjustable-rate mortgages with different terms.

LoanInterest Rate
30-year Fixed3.18%
20-year Fixed3.08%
15-year Fixed2.70%
10-year Fixed2.62%
10/1 ARM3.93%
7/1 ARM3.87%
5/1 ARM3.99%

The COVID-19 Crisis & Record Low Rates

Prior to 2020, U.S. mortgage rates for 30-year fixed-rate loans have never fallen below 3.3%, according to New American Funding. But due to the COVID-19 pandemic, the world economy faced massive unemployment and general market decline. This caused mortgage rates to drop to historic lows in March 2020, as the Federal Reserve made efforts to keep rates low in order to stimulate market activity. The low rates also prompted a refinancing boom which is projected to persist throughout 2021.

According to Reuters, in December 2020, the Federal Reserve announced it will keep the benchmark interest rate near zero until inflation rises. It’s likely to remain at this level for several years as the economy recuperates from the COVID-19 crisis. In a related report by Bloomberg, central banks around the globe will also keep market rates low throughout 2021 to help support market recovery and growth.

 

Notes on Refinancing

Homeowners refinance their mortgage to obtain better rates and terms. It’s the process of taking out a new loan to replace an existing mortgage. This allows borrowers to score a lower rate, shorten their term, or both. If you think you can secure a much better deal, especially when market rates are low, refinancing might work for you. Reducing your rate will help decrease your loan’s total interest costs, which boosts your savings.

Borrowers who refinance commonly shift from a 30-year fixed mortgage to a 15-year fixed term. If you have an ARM, you can also refinance to secure a low rate into a fixed-rate term. Borrowers may also refinance to shift from a government-backed loan such as an FHA loan into a conventional loan. This lets borrowers eliminate mortgage insurance premium (MIP), which is an additional cost that’s usually required for the full mortgage term. Refinancing is ideal if you’ll stay for a long time in your home, and if general market rates are low.

Since refinancing is basically taking out a new mortgage, it comes with certain qualifications. To be eligible, your credit score must be at least 620. But to secure more favorable rates, it’s better to have a credit score of 700 or higher. Refinancing also entails expensive closing costs, which range between 3% to 6% of your loan principal. If your loan is worth $200,000, expect your closing costs to be around $6,000 to $12,000. To justify the expensive cost, financial experts advise borrowers to refinance at least 1% to 2% lower than their current rate.

Moreover, consider the adverse refinance market fee. As of December 1, 2020, all borrowers applying for mortgage refinances are charged a 50 basis point adverse market refinance fee. This extra cost was required by Fannie Mae and Freddie Mac after massive losses due to the COVID-19 crisis. Borrowers exempted from the fee should have a balance below or equal to $125,000. FHA loans and VA loans are also not charged this fee. Take note of this extra cost before refinancing your loan.

Mortgage Points

Mortgage points, such as origination points and discount points, also affect your loan’s interest rate. These are included in your closing costs. Lenders offer discount points to help borrowers reduce their mortgage’s interest rate in exchange for an upfront fee. 1% of a loan amount is equivalent to 1 whole discount point. Depending on how much you can afford, discount points can be purchased in parts, such as a quarter point, half point, or a point and half.

For example, 1 point on a $200,000 loan is equal to $2,000, while a half point is $1,000, and a quarter point is $500. Let’s say your original rate is 6% APR and you want to purchase a point and half. In this example, you must pay $3,000 upfront, which will reduce your rate to 4.5% APR.

Origination points, on the other hand, are required by lenders to process your mortgage. This fee pays loan officers for the evaluation, processing, and approval of mortgages. Origination points typically costs around 1% of the mortgage. If your loan amount is $300,000, expect to pay $3,000 in origination fees. While it’s required, origination points can be negotiated with your lender. So talk to them to help reduce your expenses.

Property Taxes

Once you secure a mortgage, you are obligated to pay property taxes. This is a type of ad valorem tax which is charged by state and municipal governments based on the value of a good, service, or property. Property tax rate is also sometimes referred to as millage rate or mill rate. Property taxes go into an escrow account and is paid once it’s due.

Calculating Property Tax

For houses, real estate tax is calculated by multiplying your property’s current appraised value with your area’s local tax rate. Thus, real estate taxes vary greatly depending on the type of home and the property’s location.

For example, let’s suppose your property has an appraised value of $250,000, and your local tax rate is 1.5%. If we multiply your property’s value by the tax rate, your annual property tax would be $3,750. If your tax rate does not change, you can expect to pay the same amount per year. However, note that taxing authorities typically reset tax rates annually, while others may do so with different schedules, such as every 5 years.

 

When you purchase a home, most states require homeowners to get an official and unbiased appraisal. This helps them accurately determine property tax. Lenders include the appraisal expenses in your closing costs. Your local government may also require on-going property appraisals every couple of years to keep taxes up to date.

According to the U.S. Census Bureau, the average American household spends around $2,375 on property taxes annually. In 2020, Forbes reported on average property tax rates ranked by state. The following table shows states that have the lowest average property tax rate, to states with the highest tax rates. The estimated annual property taxes were based on the median home price per state.

Real Estate Tax Rates by State

Rank
(1=Lowest)
StateEffective Tax RateAnnual Taxes on $205K Home*State Median Home ValueAnnual Taxes at State Median Value
1Hawaii0.27%$560$587,700$1,607
2Alabama0.42%$854$137,200$572
3Louisiana0.53%$1,091$157,800$840
3Colorado0.53%$1,076$313,600$1,647
5District of Columbia0.55%$1,122$568,400$3,113
6Delaware0.56%$1,153$244,700$1,377
7South Carolina0.57%$1,174$154,800$887
8West Virginia0.59%$1,208$115,000$678
9Wyoming0.61%$1,247$213,300$1,298
10Arkansas0.63%$1,290$123,300$776
11Utah0.64%$1,319$256,700$1,653
11Nevada0.64%$1,303$242,400$1,542
13Arizona0.69%$1,408$209,600$1,440
14Idaho0.72%$1,473$192,300$1,382
15Tennessee0.73%$1,490$158,600$1,153
16California0.76%$1,557$475,900$3,617
17New Mexico0.79%$1,617$166,800$1,316
18Mississippi0.81%$1,654$114,500$924
18Virginia0.81%$1,667$264,900$2,155
20Montana0.84%$1,712$219,600$1,835
21North Carolina0.85%$1,741$165,900$1,410
22Indiana0.86%$1,761$135,400$1,164
22Kentucky0.86%$1,766$135,300$1,166
24Oklahoma0.90%$1,842$130,900$1,177
25Georgia0.91%$1,855$166,800$1,510
26Florida0.93%$1,902$196,800$1,827
27Missouri0.97%$1,987$151,600$1,470
28North Dakota0.99%$2,025$185,000$1,828
29Oregon1.01%$2,061$287,300$2,890
29Washington1.01%$2,065$311,700$3,142
31Maryland1.09%$2,243$305,500$3,344
32Minnesota1.13%$2,310$211,800$2,388
33Alaska1.18%$2,423$265,200$3,136
34Massachusetts1.23%$2,518$366,800$4,508
35South Dakota1.32%$2,706$159,100$2,101
36Maine1.36%$2,793$184,500$2,515
37Kansas1.41%$2,882$145,400$2,045
38Iowa1.56%$3,195$142,300$2,219
39Ohio1.58%$3,227$140,000$2,205
39Michigan1.58%$3,240$146,200$2,312
41Pennsylvania1.59%$3,257$174,100$2,767
42Rhode Island1.66%$3,407$249,800$4,154
43New York1.71%$3,497$302,200$5,157
44Nebraska1.77%$3,634$147,800$2,621
45Texas1.81%$3,703$161,700$2,922
46Vermont1.88%$3,853$223,700$4,206
47Wisconsin1.91%$3,904$173,600$3,308
48Connecticut2.11%$4,317$272,700$5,746
49New Hampshire2.20%$4,498$252,800$5,550
50Illinois2.30%$4,705$187,200$4,299
51New Jersey2.47%$5,064$327,900$8,104

*$204,900 is the median home value in the U.S. as of 2018, the year of the most recent available data.

Mortgage Insurance

While mortgage insurance is not mandatory in the U.S., most lenders require homebuyers to obtain basic home insurance coverage. Insurance is usually packaged into your loan, so part of your monthly mortgage payment goes toward insurance costs. Like property taxes, your lender puts mortgage insurance into an escrow account until it’s paid to the insurance provider on the due date.

Furthermore, other types of home insurance are required to protect the lender in case you fail to make payments. This insurance is exclusively for the lender, which means you cannot make claims on this type of insurance. It’s an extra cost you must prepare for depending on the type of loan you choose.

For conventional loans, you’re charged private mortgage insurance (PMI) if your down payment is below 20% of your home’s value. PMI can cost between 0.25% to 2% of your loan amount annually. However, once you gain 22% equity of your house, which is a loan-to-value ratio of 78%, PMI is automatically removed.

On the other hand, certain types of government-backed mortgages such as FHA loans require mortgage insurance premium (MIP). Unlike PMI, MIP is usually charged for the entire payment term. To remove MIP, borrowers with government-backed loans would typically need to refinance into a conventional mortgage. 

MIP for FHA loans are paid both as an upfront fee and an annual fee. The upfront MIP costs 1.75% of your loan amount, while the annual MIP fee costs around 0.85% of the loan amount. MIP payments are deposited into an escrow account put up by the U.S. Department of Treasury. Again, these funds are used to pay your lender in case you default on your mortgage.

Home Insurance Coverage

Home insurance protects your property and personal belongings against possible damage or loss. It’s a financial buffer in case of disastrous circumstances, such as fire or lightning strikes, water damage, theft, and even vandalism on your property.

However, note that basic home insurance may not cover certain types of damages, which means you have to purchase a separate insurance to cover them. These include damages caused by earthquakes and sinkholes, floods, sewage backups, and pet attacks from aggressive dog breeds (ex. Pitbull, German Shepherd, etc.). To obtain a specific coverage for your home, make sure to discuss it with your insurance provider.

 

How much coverage do homebuyers get? Ideally, home insurance should restore lost value in case of damage or loss to your property. Financial advisers usually recommend between $300,000 to $500,000 worth of insurance coverage. This provides six basic coverage categories, which insures your home’s dwelling and inner structures, as well as the cost of detached structures on your property. It also includes personal property coverage, loss of use coverage, personal liability coverage, and medical payments coverage.

In 2020, the average home insurance cost is estimated at $1,445 annually. Home insurance premiums are based on many different factors. This includes the home’s appraised value and features, location, proclivity to natural disasters, and even the area’s crime rate. And because of inflation, expect home insurance premiums to increase over time.

What is an Escrow Account?

An escrow account is an account that temporarily holds money until a purchase agreement has been met. For real estate, escrow accounts are used to carry the homebuyer’s payments for property taxes and mortgage insurance. This protects the funds before the money goes to the right party, such as tax authorities and your insurance provider.

It’s possible to pay property taxes and insurance yourself instead of getting an escrow account. However, this is actually inconvenient since you’ll have to make separate property tax and mortgage insurance on your own. Depending on the type of loan you’ll obtain, your lender might also require an escrow account.

For example, if your down payment is less than 20% for a conventional mortgage, you’re charged private mortgage insurance (PMI). Under this circumstance, an escrow account is mandatory. Government-backed loans such as FHA and USDA loans also require borrowers to have an escrow account for mortgage insurance premiums (MIP). VA loans, meanwhile, require a down payment of at least 10% and a strong credit profile for borrowers to opt out of having an escrow account.

 

Other Home Ownership Costs

Man power washing deck.

Besides the primary PITI costs, you must also factor in other housing-related expenses:

Homeowners Association Fees (HOA)

Homeowners association fees are monthly dues paid by homeowners who reside in HOA-governed communities. These funds are used to maintain amenities and common areas within the association. If you’re buying a house in a HOA neighborhood, you must include this cost under your PITI expenses. 

HOA fees cover general services such as lawn care and snow removal in shared areas, roads, and parking lots. Civic services such as trash removal and sewage cleaning are also paid by HOA fees. Note that the amount varies depending on your community’s needs. So if you live in an affluent neighborhood, expect HOA fees to be on the expensive side.

How much are HOA fees? While HOA fees vary greatly depending on your location, it typically costs around $200 to $300 per month. Cheaper areas may have HOA fees for $100 or less, while expensive areas have HOA fees worth $1,000 or more.

Before buying a house, be sure ask how much your HOA fees might cost. Even if you can afford your PITI costs, if your budget is tight, pricey HOA fees might be out of your budget.

Home Maintenance Costs

On top of mortgage payments, property taxes, and insurance, homeownership entails maintenance expenses. Generally, homeowners spend between 1% to 4% of their home’s value per year on maintenance costs. For example, if your house is priced at $350,000, expect to spend between $3,500 to $14,000 a year.

For new homes, you can start a budget at 2% of your home’s value. As for older property, expect to spend between 3% to 4% per year. Since older houses usually require more maintenance and fixes, you should be ready with a bigger budget. Before you buy a house, make sure to have ample savings for maintenance to protect your investment.

Regular upkeep includes things like routine lawn mowing, cleaning vents and gutters, power washing decks, replacing leaky faucets and light fixtures, etc. These are run-of-the-mill maintenance jobs you can anticipate, which makes it easier to budget. However, things like roof replacement, getting a new air conditioning unit or water heater, and other structural issues are considered major home repairs. Thus, be sure to have enough emergency savings to cover these expensive costs.

The State of Home Services Spending

HomeAdvisor reported that in 2020, the average household spending on home services amounted to $13,138. This is a lot higher compared to the previous year, where homeowners spent an average of $9,081 in 2019. The report notes that the drastic increase was likely driven by higher labor costs and increased supply due to the COVID-19 pandemic. To break it down, home improvement spending was $8,305, while home maintenance spending was $3,192, and home emergency spending cost was $1,640.

Because people spent more time indoors, they caused more wear and tear in their property. Homeowners who work from home are also driven to create new uses for existing spaces at home. Finally, since people spend more time at home, they likely notice more problems they should fix on their property.

 

Don’t Forget to Budget for Closing Costs

Closing costs are a collection of different expenses for services required to finalize a mortgage deal. This includes costs such as origination points (for mortgage processing and evaluation), discount points, appraisal fees, home inspection costs, title fees, etc.

How much are closing costs? Generally, closing costs can run between 3% to 6% of your loan amount. For example, if you borrowed $300,000 to purchase a home, your closing cost can be anywhere between $6,000 to $15,000. The best way to cover closing costs is to pay for them upfront. While financing closing costs into your mortgage may be an option, it increases your principal amount, resulting in higher interest charges over the life of the loan. You’re required to pay closing costs when you purchase a home or refinance your mortgage.

Lenders must declare your closing costs under a Loan Estimate document when you first apply for a mortgage. It should also be outlined in a Closing Disclosure document given a few days before finalizing the deal. Be sure to review these documents closely and clarify fees that you’re not aware about.

The following section details common fees included in your closing costs:

  • Origination Points: These are fees paid to the lender to prepare, process, evaluate, and finalize mortgage requirements. It’s usually around 1% of your loan amount. Origination points can be reduced by negotiating with your lender.
  • Application fee: Pays for processing the loan request. The cost varies depending on your lender and the amount of work needed, which is usually between $300 to $1,500. It includes credit checks and other administrative costs.
  • Attorney’s fee: Depending on your location, some states require a lawyer to oversee mortgage deals upon closing. Some lawyers may charge by the hour, with rates that go from $150 to $350 per hour. Others may charge a flat fee, which may range from $500 to $1,500 or more. Expect attorney’s fees to be higher for homes located in busy metropolitan areas.
  • Mortgage Broker fee: Those who decide to work with a mortgage broker should prepare a commission fee. This ranges between 0.5% to 2.75% of the loan amount. Mortgage brokers are either paid by the lender or the borrower. If the fee is covered by the lender, borrowers typically receive a more expensive loan because the broker’s commission is usually more lucrative. If the borrower is the one who pays the broker, they must factor it into the closing costs before deciding if it’s a good deal.
  • Property Appraisal fee: Home appraisal is required to estimate the current value of the home. This verifies the loan amount you need to finance your purchase. Home appraisals can cost between $200 to $600, depending on the size and type of property.
  • Home Inspection fee: Lenders usually require a home inspection to ensure that the property is in good condition for occupancy. Home inspections are required when you obtain government-backed mortgages such as FHA loans, since they adhere to strict safety standards. If the inspector reports issues, you may negotiate a lower price. However, you can also back out of the deal if the seller cannot agree to fix the issues. Home inspection costs range between $200 to $500.
  • Lender’s & Owner’s Title Insurance: Lenders require a title insurance which protects them in case someone makes a claim on the home after it’s sold. Homebuyers should also consider taking a title insurance to protect themselves in the event a claim is made after they buy the home. Owner’s policy titles usually cost around 0.5% to 1% of the home’s value. The National Association of Independent Land Title Agents say homebuyers should expect to pay around $2,000 for a title insurance. On average, the cost of a lender’s and owner’s title insurance amounts to $1,374 for a home with a national median value of $200,000.
  • Title Search fee: A title search is performed to make sure the seller truly owns the home. It also verifies if there are no other outstanding claims against the property. This may require more work and time especially if the title records are not digitized. The fee is included when you apply for a title insurance. Title searches typically cost around $74 to $200, but can be as high as $400 for more labor-intensive searches.
  • Property Taxes: Homebuyers are usually expected to pay at least two months of city and county property taxes upon closing.

The Basics of Home Appreciation

When it comes to homebuying, it’s worth thinking if the property’s price will grow. This is advantageous, especially if you decide to sell the home after several years.

When a home appreciates, it basically means the property’s value has increased over the years. How much a home appreciates is based on your property’s condition, any improvements you’ve made, and your local real estate market. A home’s appreciation rate influences how good of an investment your property will be. This is worth noting before you decide to buy or sell a home in a given area. Moreover, if you make home improvements like property expansion or kitchen renovations, your home’s value will increase.

While price growth varies from house to house, there are factors that influence how much it will appreciate over time. This lies in your home’s location. If it’s a good area where many people want to live, home prices will certainly increase. If it’s an “up and coming” neighborhood that’s being developed or connected to a city infrastructure, it will likely appreciate over time. Generally, homes close to the city, business districts, top schools, and other conveniences, usually appreciate at a higher rate.

How much do homes appreciate? According to Zillow, home values have historically appreciated at a national average rate between 3% to 5% annually. But depending on your location, your home’s price can vary from the national average. 

Home Price Growth in 2020

Big economic changes such as historic low rates significantly affect the growth of home prices. Black Knight, Inc., a data analytics company, reported that home price appreciation remained generally robust in 2020 despite the COVID-19 crisis.

At the beginning of the pandemic, home price appreciation tumbled to 0% in May 2020, which is the first time house prices fell flat year-over-year since early 2012. However, because of record low rates and improved affordability driven by the Federal Reserve, home prices largely increased in 2020. The higher prices were also due to severe housing shortage, more specifically in highly populated metro areas. Black Knight reported that the annual home appreciation rate drastically rose to 14.2% in September 2020—this is the highest recorded home price growth rate in 15 years.

 

Estimating Your PITI

Couple doing computations.

Before you purchase a house, it’s a good idea to calculate your PITI to know if you can afford the costs. It will help you determine if your budget is too tight for your prospective home price. You can use what you know about PITI to look for homes that are within your price range.

To see this at work, we’ll use the above calculator for the following example. Just enter the pertinent loan details and you’ll see the results.

Suppose you want to buy a house priced at $350,000. You currently have enough money to make a 10% down payment worth $35,000. This reduces your loan amount to $315,000. You’re thinking of taking a 30-year fixed-rate mortgage at 3.2% APR. To reduce your rate, you intend to purchase 1 discount point, and your lender also agrees to charge 1 origination point. Because your down payment is less than 20%, you must pay must PMI. In this example, the PMI charge is 0.5% of your loan amount. PMI will be canceled once your loan-to-value ratio reaches 78%.

The following table shows your resulting total monthly mortgage payment with PMI and without PMI. It also breaks down the different costs of your loan.

30-Year Fixed-rate Mortgage
Start Date: January 2021
Pay-off Date: December 2050
Home Value: $350,000
Down Payment: $35,000 (10%)
Annual Appreciation: 3%
Loan Amount: $315,000
PMI: 0.5%
Interest Rate (APR): 3.2%
Origination Points: 1%
Discount Points: 1%
Other Closing Costs: $500
Finance Points & Closing Costs? No.
Annual Property Tax: $2500
Annual Homeowners Insurance: $1,500
Monthly HOA Fees: $300
Annual Home Maintenance: $3,500

Loan DetailsAmount
Monthly Mortgage Payment without PMI$2,262.27
Initial Monthly Mortgage Payment with PMI$2,393.52
PMI Cost per month$131.25
Total PMI Cost after 61 payments$8,006.25 PMI (Pay-off Date: Feb 2026)
Total Interest Costs$272,411.18
Monthly Property Tax$208.33
Total Property Tax$75,000.00
Monthly Homeowner’s Insurance$125.00
Total Homeowner’s Insurance$45,000.00
Monthly HOA Fees$300.00
Total HOA Fees$108,000.00
Monthly Maintenance Cost$291.67
Total Maintenance Cost$105,000.00
Total Annual Payment$27,447.25
Total of 360 Payments$831,423.68
Est. Home Value in 15 Years$545,288.60
Est. Home Value in 30 Years$849,541.86

In this example, your monthly mortgage payment amounts to $2,262.27 without PMI. But with PMI, you must add $131.25 to your payment, which increases your monthly mortgage to $2,393.52. It will take 61 payments until your PMI is canceled, which amounts to a total of $8,006.25. Before you buy a house with 10% down, consider this extra cost. Furthermore, with a 3% appreciation rate, if you keep your home in good condition, it will be worth $545,288.60 after 15 years. And after 30 years, the home’s price will increase to $849,541.86.

The above calculator also details the monthly and total costs for property taxes, homeowner’s insurance, HOA fees, and maintenance costs. It gives you a pretty good idea how much you’ll be spending long-term even before you buy a house.

Knowing your monthly mortgage payment should help you prepare your finances. If your budget is too tight, consider purchasing a more affordable home. On the other hand, if you have enough room in your finances, then it may be a viable deal. Finally, before buying a house, make sure to shop for different loans to find the most favorable rate. Again, a lower interest rate will help you increase your mortgage savings.

In Summary

PITI includes different components that make up your total monthly mortgage payment. It’s an acronym that stands for principal, interest, taxes, and insurance. PITI also includes other home ownership expenses such as homeowner’s association (HOA) fees as well as routine home maintenance costs. Calculating all these factors together will help you find the total cost of your monthly mortgage.

PITI matters because lenders use it to assess how much you may qualify to borrow. Lenders estimate PITI and use it to compute your DTI ratio, which is an important indicator for creditworthiness. A high DTI ratio suggests you have too many debts and cannot afford mortgage payments. Meanwhile, a lower DTI ratio increases your chances of loan approval. It’s a sign you have enough income to make consistent mortgage payments. In general, borrowers should maintain a back-end DTI no higher than 43% to obtain a qualified mortgage. A lower DTI ratio also entitles you to more competitive interest rates.

Knowing the components of PITI and different mortgage expenses should help prepare you for homeownership. It’s worth knowing all the pertinent mortgage costs to avoid spending too much. It will also save you the hassle of being surprised by “added expenses” which are easy to overlook.

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