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Use the same price basis when comparing loan scenarios.
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A 20% down payment starts the sample without estimated PMI.
Use 0 for a genuine no-interest scenario or a value such as 6.5 for 6.5%.
% / year
The combined term must be from 1 through 600 months.
years

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Choose 12 monthly or 26 modeled biweekly payments per year.
Use the first contractual due date for schedule labels and day-count estimates.
Keep Standard for ordinary comparisons; the other choices are explicit mathematical estimates.
Adds entered costs to cash to close without financing them.
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Enter an annual percent of price or a known annual amount.
Enter an annual premium estimate, or keep 0 to exclude it.
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Enter monthly association dues, or keep 0 when none apply.
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Enter an annual rate estimate, or keep 0 to exclude PMI.
% / year
Choose a planning threshold; verify the actual cancellation rules with the servicer.
Keep 0 for scheduled payments only.
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Keep the amount at 0 to omit this one-time principal payment.
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Formatting only; enter every amount in the same selected currency.
MeasureEstimatePlanning meaningCopy
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PaymentDateTotalPrincipalInterestEscrowPMIBalanceCopy
{{ row.period }}{{ row.date }}{{ money(row.total_payment) }}{{ money(row.principal) }}{{ money(row.interest) }}{{ money(row.escrow) }}{{ money(row.pmi) }}{{ money(row.balance) }}
Loan yearPaymentsPrincipalInterestEscrowPMIEnding balanceCopy
{{ row.year }}{{ row.payment_count }}{{ money(row.principal) }}{{ money(row.interest) }}{{ money(row.escrow) }}{{ money(row.pmi) }}{{ money(row.balance) }}
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A mortgage payment has several parts that answer different questions. Principal repays the amount borrowed. Interest is the lender's charge on the outstanding balance. Property tax, homeowners insurance, homeowners association dues, and private mortgage insurance can raise the amount due without reducing the loan balance.

The scheduled principal-and-interest payment for a fixed-rate loan is designed to amortize the balance over a set term. Early payments usually contain more interest because the balance is larger. As principal falls, less interest accrues and more of the same scheduled payment reaches principal. Extra principal speeds up that shift, but it does not normally reduce the contractual scheduled payment unless the lender recasts the loan.

Amount financed
Home price minus down payment. Entered closing costs are not added to the loan.
Loan-to-value ratio
Amount financed divided by home price, expressed as a percentage.
Cash to close
Down payment plus the closing costs entered in the scenario.
Initial housing payment
First modeled payment including principal, interest, entered tax and insurance, HOA dues, PMI, and recurring extra principal.

Affordability is broader than the first payment. Buyers also need room for utilities, repairs, maintenance, changing taxes and insurance, moving costs, reserves, and other debts. An amortization estimate can compare loan scenarios, but only a lender's Loan Estimate and Closing Disclosure state the terms and costs offered for a real transaction.

Private mortgage insurance (PMI) is especially easy to overread. A loan-to-value threshold can estimate when premiums might stop, but actual cancellation or automatic termination depends on the loan, payment history, property value, investor rules, and servicer process.

How to Use This Tool:

Build one complete purchase scenario, then change one assumption at a time when comparing alternatives.

  1. Enter Home price and the Down payment as either a percentage or cash amount. The down payment must leave a positive amount to finance.
  2. Enter the annual Interest rate, combined term from 1 through 600 months, payment frequency, and first contractual payment date.
  3. Add closing costs, annual property tax, annual insurance, monthly HOA dues, and an annual PMI estimate when they apply. Keep all money amounts in the same currency.
  4. Choose the PMI planning threshold and interest-accrual method. Use Standard for ordinary fixed-rate comparisons unless the loan documents require a different estimate.
  5. Add recurring or lump-sum principal only when you intend to compare an accelerated payoff. Confirm that the lender will apply it to principal and check any prepayment terms.
  6. Review Cash to close, Principal and interest, Initial housing payment, payoff date, total interest, and warning message. Compare them with the lender's documents before acting.

Interpreting Results:

Scheduled payment is principal and interest before escrow-style costs, PMI, and extra principal. Initial housing payment includes those entered additions, so it is the better first-month cash-flow estimate. Neither amount includes costs that were left at zero.

  • Cash to close includes only down payment and entered closing costs. It excludes reserves, unentered prepaids, inspection costs, moving costs, and seller or lender credits.
  • Interest saved and payments saved compare the accelerated schedule with the same scenario without recurring extra principal or the lump sum.
  • An LTV above 80% with a zero PMI rate triggers a warning because the payment may be understated.
  • Changing the currency changes formatting only. It does not convert prices, rates, taxes, or insurance.

Technical Details:

The model builds a deterministic payoff schedule for a fixed loan amount and annual rate. Monthly schedules use 12 periods per year and advance by calendar month; biweekly schedules use 26 periods and advance by 14 days. The first payment date labels the first schedule row and anchors day counts for the alternate accrual methods.

Formula Core:

Let H be home price, D down payment, and L amount financed. A percentage down payment is converted to cash before subtraction.

L=H−D LTV=LH×100%

For periodic rate r and n scheduled payments, the ordinary-annuity payment is:

P= Lr1−(1+r)−n

At a zero interest rate, the scheduled payment is L/n. For standard monthly or biweekly accrual, r equals the entered annual rate divided by 12 or 26. The combined term is converted to the selected number of periods and rounded to a whole payment.

Accrual Rule Core:

Each schedule row calculates interest from the opening balance. Standard accrual uses a fixed periodic fraction; simple-daily and continuous estimates use the actual whole-day gap between modeled payment dates.

MethodInterest for one periodInterpretation
Standardopening balance × annual rate / periods per yearOrdinary fixed-period comparison.
Simple dailyopening balance × annual rate / 365.25 × day countDay-count estimate with a payment initially sized from annual rate / periods per year.
Continuousopening balance × [eannual rate × days / 365.25 − 1]Explicit mathematical estimate, not a claim about a lender's contract.

Scheduled principal equals scheduled payment minus period interest. Recurring extra principal and a selected lump sum are added afterward, then capped so principal cannot exceed the remaining balance.

Entered tax, insurance, and HOA dues are spread evenly across the selected number of annual payments:

periodic escrow estimate= annual property tax+annual insurance+12×monthly HOApayments per year

PMI is estimated from opening balance at the entered annual rate. It applies while the opening balance is above the selected 80% or 78% home-price threshold, or through payoff when Never in this estimate is selected.

period PMI=opening balance×annual PMI ratepayments per year

Schedule boundaries:

  • Interest may range from 0% through 50%; loan term from 1 through 600 months; and PMI rate from 0% through 20%.
  • Monthly dates preserve the requested day when possible and use the last valid day in shorter months. Biweekly dates advance by 14 elapsed days.
  • Property tax entered as a percentage is applied to home price, not the declining loan balance.
  • The model keeps full numeric precision through the schedule and formats money only for display.

Responsible Use Note:

Results are educational estimates, not a loan offer, approval decision, tax opinion, or financial advice. The model assumes a fixed entered rate and does not calculate annual percentage rate, points, lender fees, adjustable-rate changes, escrow shortages, property-value changes, late charges, recasting, refinancing, or prepayment penalties.

  • Use the promissory note and servicing instructions to confirm interest accrual and principal-only payments.
  • Use the Loan Estimate and Closing Disclosure to verify cash to close and the complete payment.
  • Ask the servicer about PMI cancellation rather than treating the 80% or 78% planning threshold as automatic.

Worked Examples:

A purchase with escrow and PMI

A 425,000 home with 15% down leaves 361,250 financed and an 85% LTV. At 6.5% for 30 years with monthly standard accrual, principal and interest are about 2,283.35. Adding 1.1% annual property tax, 1,800 annual insurance, and 0.55% annual PMI produces an initial housing payment of about 2,988.50. With the 80% planning threshold, PMI stops in the estimate after payment 57, but the borrower still needs the servicer's actual cancellation rules.

References: