What Does Your Full Monthly Mortgage Payment Include?

A mortgage payment is more than principal and interest. Understanding your mortgage payment is fundamental to real estate investment analysis because it determines debt service — the denominator in DSCR and the largest line item in cash flow calculations. Lenders qualify borrowers on the full PITI payment — Principal, Interest, Taxes, and Insurance — plus PMI and HOA fees where applicable. The non-P&I costs often surprise first-time buyers, sometimes adding $500-$1,500 per month beyond the base loan payment.

Principal and Interest (P&I)

The P&I portion is calculated using the standard amortization formula (PMT function), which produces a fixed monthly payment that gradually shifts from interest-heavy to principal-heavy over time. For a detailed breakdown of how this split evolves, see our mortgage amortization calculator. At 6.5% on a $300,000 loan, monthly P&I is approximately $1,896 — but total interest over 30 years exceeds $382,000.

Property Taxes

Property tax rates vary dramatically by state and municipality. New Jersey averages 2.47% of assessed value while Hawaii averages just 0.28% (Tax Foundation). On a $350,000 home, that difference is $7,665 per year — more than $600/month. Always verify the actual assessed value with your county assessor, as assessed value often differs from purchase price (IRS Publication 530).

PMI Rules and Cancellation

Private Mortgage Insurance is required when the down payment is below 20%. Under the Homeowners Protection Act (HPA), PMI on conventional loans automatically terminates at 78% LTV based on the original amortization schedule and can be requested for removal at 80% LTV (CFPB PMI guide). FHA loans follow different rules — mortgage insurance premium (MIP) lasts the life of the loan unless you put 10%+ down, in which case it drops after 11 years. PMI typically costs 0.3-1.5% of the loan amount annually.

Insurance and HOA

Homeowner’s insurance costs are heavily influenced by climate risk. Florida and Texas coastal properties may pay 3-4x the national average due to hurricane exposure. HOA fees are common for condos and planned communities, ranging from $100-$800+ monthly. Lenders include HOA in qualification calculations even though it is technically separate from PITI.

How to Use This Calculator

1. Home Price — Enter the full purchase price of the property. This is the total amount before any down payment.
2. Down Payment (%) — Select your planned down payment as a percentage. Below 20% triggers PMI. FHA minimum is 3.5%, conventional minimum is typically 5%.
3. Interest Rate — Enter the annual interest rate quoted by your lender. Check current rates at Freddie Mac’s Primary Mortgage Market Survey for benchmarks.
4. Loan Term — Choose 15 or 30 years (most common). Shorter terms have higher monthly payments but significantly less total interest. Compare using our amortization calculator.
5. Annual Property Tax — Enter the yearly property tax amount. Find this on the county assessor’s website or recent tax records from the listing.
6. Annual Homeowner’s Insurance — Enter your annual premium. Get quotes from multiple insurers — rates vary 30-50% between carriers for the same coverage.
7. PMI Rate — If your down payment is under 20%, enter the annual PMI rate (typically 0.3-1.5% depending on credit score and LTV). Your lender provides this figure.
8. Monthly HOA Fee — Enter any homeowner’s association dues. Set to $0 if not applicable.

The calculator instantly breaks down your total PITI payment with each component itemized, plus total interest paid over the full loan life. Use this to compare different scenarios — adjust down payment percentage to see PMI impact, or change loan term to compare 15-year vs 30-year costs.