Monthly Payment Formula:
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Definition: This calculator determines your complete monthly mortgage payment including principal, interest, taxes, and insurance (PITI).
Purpose: It helps homebuyers and homeowners understand their full monthly housing costs by incorporating escrow payments.
The calculator uses the formula:
Where:
Explanation: The principal/interest payment is combined with 1/12th of annual taxes and insurance to determine the complete monthly payment.
Details: Most lenders require escrow accounts to ensure taxes and insurance are paid. This calculation shows your true monthly housing cost.
Tips: Enter your principal/interest payment (from your loan terms), annual property tax, and annual insurance costs. All values must be ≥ 0.
Q1: What exactly is escrow?
A: An escrow account holds funds for property taxes and insurance, paid monthly along with your mortgage payment.
Q2: How do I find my property tax amount?
A: Check your tax assessment notice or contact your local tax assessor's office.
Q3: Can insurance costs change?
A: Yes, insurance premiums may increase annually. Your escrow payment will adjust accordingly.
Q4: Is PMI included in this calculation?
A: No, Private Mortgage Insurance (PMI) would be an additional cost if your down payment was less than 20%.
Q5: Why divide by 12 for taxes/insurance?
A: Lenders collect 1/12th of annual costs each month to ensure funds are available when payments are due.