Reviewed and Fact-Checked by: David Chen, CFA
Last Updated: October 2024
Calculate your true monthly housing costs, including principal, interest, property tax, and insurance, to get a clear picture of your mortgage affordability.
Mortgage Calculator with Property Tax
Estimated Total Monthly Payment (PITI)
Mortgage Calculator with Property Tax Formula
The total monthly payment (PITI) is the sum of four components: Principal, Interest, Tax, and Insurance.
1. Monthly Principal & Interest (P&I) Formula:
M_PI = L * [ r * (1 + r)^n ] / [ (1 + r)^n - 1 ]
2. Total Monthly Payment (PITI) Formula:
PITI = M_PI + M_Tax + M_Ins
Formula Sources: Investopedia – Mortgage Calculation, Bankrate – PITI Breakdown
Variables Explained
- P (Home Price): The total purchase price of the home.
- D (Down Payment): The initial, upfront amount paid.
- L (Loan Amount): The borrowed principal amount (P – D).
- R (Annual Interest Rate): The yearly rate expressed as a percentage.
- r (Monthly Interest Rate): R / 12 / 100 (The rate used in the P&I formula).
- N (Loan Term): The duration of the loan in years.
- n (Total Payments): N * 12 (The total number of monthly payments).
- T_rate (Annual Tax Rate): The property tax rate as a percentage of the home price.
- I_annual (Annual Insurance): The yearly premium for homeowners insurance.
- M_PI: Monthly Principal & Interest payment.
- M_Tax: Monthly Property Tax payment.
- M_Ins: Monthly Home Insurance payment.
What is a Mortgage Calculator with Property Tax?
A standard mortgage calculator typically only computes the Principal and Interest (P&I) portion of your monthly payment. However, the true cost of homeownership, often referred to as PITI, includes four components: Principal, Interest, Property Taxes, and Homeowners Insurance. This specialized calculator provides the full picture by incorporating the often-mandatory tax and insurance components.
For most homeowners, particularly those who put less than 20% down, the lender will require an escrow account. The PITI amount is collected monthly, and the lender holds the Tax (T) and Insurance (I) portions in escrow to pay those annual bills on your behalf. Therefore, calculating the full PITI is essential for accurate budgeting and determining true affordability.
How to Calculate Total Monthly Payment (Example)
- Determine the Loan Amount (L): Subtract the Down Payment from the Home Price. (e.g., $300,000 Price – $60,000 Down = $240,000 Loan).
- Calculate Monthly P&I (M_PI): Use the loan amount, the monthly interest rate (Annual Rate / 1200), and the total number of payments (Term in Years * 12) in the P&I formula.
- Calculate Monthly Property Tax (M_Tax): Multiply the Home Price by the Annual Property Tax Rate (as a decimal), then divide the result by 12. (e.g., $300,000 * 1.2% / 12 = $300/month).
- Calculate Monthly Insurance (M_Ins): Divide the Annual Home Insurance premium by 12. (e.g., $1,500 / 12 = $125/month).
- Sum the Components: Add the three monthly payments (M_PI + M_Tax + M_Ins) to get the final Total Monthly Payment (PITI).
Frequently Asked Questions (FAQ)
How accurate are the property tax and insurance estimates?
They are estimates based on the rates you input. Property tax rates change annually and are dependent on your local jurisdiction and home assessment. Insurance premiums depend on the policy, coverage, and location. Always consult with a tax professional and insurance agent for exact figures.
What does PITI stand for?
PITI is an acronym that stands for Principal, Interest, Taxes, and Insurance. It represents the four core components of a total monthly housing payment.
Do I have to include property tax and insurance in my mortgage payment?
If you have an escrow account with your lender (typically required if your down payment is less than 20%), yes, these costs will be collected monthly as part of your total payment. If you pay taxes and insurance directly (usually possible with >20% down), they are still required costs of ownership, just paid separately.
What is the difference between APR and the Interest Rate?
The Interest Rate is the annual cost of borrowing the principal. The Annual Percentage Rate (APR) is a broader measure of the cost of the loan, including the interest rate plus other fees like origination charges and discount points. The calculator uses the basic Annual Interest Rate.