This calculator provides a precise estimate of your total monthly mortgage payment, including the principal and interest (P&I), as well as essential escrow components like property taxes and home insurance.
Mortgage Loan Calculator with Taxes
Estimated Total Monthly Payment
$0.00Mortgage Loan Calculator with Taxes Formula
Variables Explained
- Loan Principal ($): The initial amount of money borrowed for the home purchase.
- Annual Interest Rate (%): The yearly percentage rate charged by the lender. This determines the interest portion of your payment.
- Loan Term (Years): The duration over which you agree to repay the loan (e.g., 15 or 30 years).
- Annual Property Taxes ($): The yearly cost levied by the local government, typically collected monthly and held in escrow.
- Annual Home Insurance ($): The yearly cost of insuring the property, also typically collected monthly via escrow.
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What is a Mortgage Loan Calculator with Taxes?
A Mortgage Loan Calculator with Taxes provides a more complete and realistic picture of homeownership costs than a simple P&I (Principal and Interest) calculator. It factors in the two crucial elements of PITI (Principal, Interest, Taxes, and Insurance) that often surprise first-time buyers: property taxes and homeowner’s insurance.
Lenders often require borrowers to pay these amounts monthly into an escrow account. The calculator aggregates these four key costs to give you the true monthly financial obligation, which is vital for budgeting and determining affordability. Ignoring taxes and insurance can lead to a significant understatement of your true housing expense.
How to Calculate Total Monthly Payment (Example)
Let’s use an example: Loan $300,000, 30 years, 6.5% Annual Rate, $4,000 Annual Taxes, $1,200 Annual Insurance.
- Calculate Monthly Rate (r) and Total Payments (n): $r = 6.5\% / 1200 \approx 0.005417$. $n = 30 \times 12 = 360$ months.
- Calculate P&I Payment ($M_{PI}$): $300,000 \times \frac{0.005417(1+0.005417)^{360}}{(1+0.005417)^{360} – 1} \approx \$1,896.20$.
- Calculate Monthly Taxes: $\$4,000 / 12 \approx \$333.33$.
- Calculate Monthly Insurance: $\$1,200 / 12 = \$100.00$.
- Calculate Total Monthly Payment ($M_{Total}$): $\$1,896.20 + \$333.33 + \$100.00 = \$2,329.53$.
Frequently Asked Questions (FAQ)
- Does the monthly payment remain the same for the entire loan term? The Principal and Interest (P&I) portion is fixed for a conventional fixed-rate mortgage. However, the Taxes and Insurance (TI) portion held in escrow can and often does change annually as property values or insurance premiums rise or fall.
- What is ‘Escrow’ and why do lenders require it? Escrow is an account managed by the lender to hold funds specifically for property taxes and home insurance. Lenders require it to ensure these essential payments are made on time, protecting their collateral (your home) from tax liens or damage.
- Do I still need to pay PMI (Private Mortgage Insurance)? This calculator does not include PMI. PMI is typically required if your down payment is less than 20% of the home’s value. If PMI is required, you must add that monthly cost to the calculator’s result.
- How accurate are the property tax and insurance estimates? The calculator is mathematically accurate based on your inputs. However, annual tax and insurance costs are estimates. You should always use recent quotes from your insurance agent and local tax assessor for the most accurate figure.