Quick facts
- •Principal and interest on a $350,000 house might be $2,100. Your actual payment is usually $2,500 to $2,700 once taxes, insurance, and PMI are added. The gap is not a surprise. It is the real cost.
- •Property taxes vary wildly by state. New Jersey averages around 2.1%. Hawaii sits near 0.3%. On a $500,000 home, that is roughly $750 a month difference for the same house.
- •PMI disappears automatically at 22% equity. You can request removal at 20%. Most servicers will not remind you when you cross the line.
- •A 20% down payment is not required to buy a house. It is the point where PMI stops. Those are different questions with different answers.
- •The 28/36 rule is the lender's ceiling, not your budget. Pre-approval is what the bank will lend. It is not what you can live with.
- •Closing costs add another 3% to 6% on top of your down payment. That cash is due before you get the keys.
Why Mortgage Calculator matters
The $2,100 quote that becomes $2,600
- •Lenders quote principal and interest because it is the lowest number on the page.
- •Taxes, insurance, PMI, and HOA fees are not optional. They arrive every month whether the quote included them or not.
- •The gap is often $400 to $600 a month in the first years of the loan.
- •A budget built on the quote fails in month one. A budget built on PITI survives.
The PMI you keep paying after you could stop
- •PMI is automatic at 22% equity by law. But it is removable by request at 20%.
- •Most servicers do not send a letter when you cross the threshold. The burden is on you to track it.
- •A written request with proof of equity is often enough to remove it. No refinance required.
- •On a $300,000 loan, PMI runs roughly $125 a month. Removing it a year early saves $1,500.
The 20% down decision nobody explains
- •20% down removes PMI and can improve your rate. It also ties up cash you may need for emergencies.
- •Less than 20% is not a mistake. It is a tradeoff between monthly cost and liquidity.
- •Waiting three years to save 20% can cost more than PMI would have if home prices rise while you wait.
- •Running the numbers both ways is the only way to decide which tradeoff fits your life.
Real-world examples
A $350,000 house with 5% down — what is the real payment?
About $2,600, not the $2,100 the lender quotes
Principal and interest on $332,500 at 6.5% is $2,100. Add property tax (~$320/mo), homeowners insurance (~$100/mo), and PMI (~$80/mo) and you are at $2,600. That extra $500 a month is not a surprise. It is the actual cost of owning the house. The lender quoted you the loan. They did not quote you the life.
10% down or 20% down on a $300,000 house?
20% saves about $20,000 over five years
At 10% down you pay PMI (~$1,200/year) for roughly five years, which is $6,000. Your loan is $30,000 larger, which costs about $14,000 more in interest over that same window. The combined cost of choosing 10% is roughly $20,000. That is a real number. It is not a rounding error. But it also assumes you have the extra $30,000 sitting in cash. If you do not, 10% may still be the right answer.
How much house can I afford on $90,000 income?
Roughly $320,000 to $400,000 depending on debts
The 28/36 rule puts max housing at $2,100 a month on $90,000. At 6% and 20% down, that buys about $320,000. If you have no other debt, some lenders stretch to 40%, which is $3,000 a month and buys around $450,000. But "can borrow" and "can live with" are different questions. Leave room for the things that actually happen: a car repair, a medical bill, a job change.
What makes this mortgage calculator useful
Full PITI, not just the loan
Principal, Interest, Taxes, Insurance, and PMI, each shown separately so you can see exactly where every dollar goes. No hidden line items buried in a single number.
PMI removal month
A marker on the timeline shows the exact month PMI drops off automatically at 78% loan to value, and the earlier month you can request removal at 80%.
Down payment explorer
Slide from 3% to 20% and watch PMI disappear and the total cost line fall in real time. See the tradeoff before you commit to it.
Closing cost estimate
Closing costs add 3% to 6% on top of the down payment. This estimate folds them into the cash you actually need at the table.
Professional applications
Real Estate Agents
Agents use PITI calculators to correct buyer expectations before they fall in love with a house they cannot afford.
A buyer pre-approved for $2,200/month can afford about $280,000 at 6.5%, not the $350,000 they were touring. Better to know that before the offer than after the inspection.
Mortgage Lenders
Loan officers run 15 years vs 30 years and different down payment scenarios to find the right fit for the borrower's actual life.
30 years at 6.5%: $2,500/mo. 15 years at 6%: $3,800/mo. The 15 years saves $150,000 in interest but adds $1,300 to the monthly. That $1,300 is the question.
Financial Advisors
Advisors help clients decide between paying down a mortgage and investing the difference.
A 3% mortgage is cheap money. Invest the difference. A 7% mortgage is a guaranteed 7% return by paying it down. The math is not the same at every rate.
Historical context
Treating pre-approval as affordability
The mistake
"The bank pre-approved me for $450,000, so that is what I can afford."
What to do instead
The bank is calculating what it is willing to lend, not what fits your life. The 28/36 rule is their ceiling. Your actual budget should subtract childcare, student loans, retirement savings, and the things you actually spend money on every month.
Why it matters
The house that maxes out pre-approval leaves zero margin for a job change, a medical bill, or an adjustable rate resetting. The 2008 crisis was built on exactly this gap. Borrowers qualified for homes they could not afford the first time anything went wrong. The quote was not the problem. The assumption was.
Frequently asked questions
What is PITI?+
Principal, Interest, Taxes, Insurance. It is the full monthly payment, the number that actually leaves your account. Most calculators show only principal and interest, which is like looking at a car's sticker price without tax, registration, or insurance. The real number is 20–40% higher. PITI is what lenders use to qualify you. It should be what you use to budget.
How much down payment do I really need?+
As little as 3% on a conventional loan or 3.5% with FHA. Below 20% you pay PMI. The sweet spot is 20% if you can, because it eliminates PMI and improves your rate. But waiting years to save 20% can cost more than PMI would have if home prices rise while you wait. The right answer depends on your market, your savings, and how long you plan to stay.
When does PMI go away?+
By law, PMI automatically terminates when your loan balance reaches 78% of the original home value, which is 22% equity. You can also request cancellation at 20% equity. Most servicers will not remind you. Mark the date on your calendar and call them. A written request with proof of equity is often enough.
What about closing costs?+
Closing costs run 3%–6% of the loan amount: origination fees, title insurance, appraisal, recording fees, and prepaid escrow. On a $300,000 loan, budget $9,000–$18,000. This cash is due at closing. It is not part of the monthly payment, which is why first-time buyers are often surprised by it.