How the monthly payment is calculated
The principal and interest part of your payment is a fixed amount that pays off the loan over its term. It depends on three things: how much you borrow, the interest rate and how many years you take. Early payments are mostly interest; later payments are mostly principal. The schedule tab shows how this shifts each year.
On top of principal and interest, most homeowners pay:
- Property tax: set by your county or city, usually 0.3% to 2.5% of the home’s value per year. See the property tax calculator.
- Homeowners insurance: required by your lender. A standard policy averaged $1,569 a year in 2022, from under $900 in Oregon to over $2,600 in Florida and Louisiana (NAIC), and premiums have risen since.
- PMI: when your down payment is under 20%, typically 0.3% to 1.5% of the loan per year.
- HOA fees: if the home is in a community with a homeowners association.
An example: a $400,000 home
Here’s the monthly payment on a $400,000 home with 20% and with 10% down:
| $400,000 home, a month | 20% down | 10% down |
|---|---|---|
| Loan | $320,000 | $360,000 |
| Principal & interest | $2,180.79 | $2,453.39 |
| Property tax | $366.67 | $366.67 |
| Home insurance | $150.00 | $150.00 |
| PMI | – | $150.00 |
| Monthly payment | $2,697.46 | $3,120.06 |
| Total interest over 30 years | $465,090 | $523,224 |
A 30-year fixed loan at 7.24%, with property tax of 1.1% of the price a year, homeowners insurance of $1,800 a year and PMI of 0.5% of the loan a year while the down payment is under 20%.
Putting 10% down instead of 20% means a bigger loan, a higher payment and PMI until the balance falls to 78% of the home’s value.
Monthly payments by loan amount and rate
Even half a percent on the rate changes the payment noticeably:
| Loan | 6% | 6.5% | 7% | 7.5% |
|---|---|---|---|---|
| $200,000 | $1,199 | $1,264 | $1,331 | $1,398 |
| $300,000 | $1,799 | $1,896 | $1,996 | $2,098 |
| $400,000 | $2,398 | $2,528 | $2,661 | $2,797 |
| $500,000 | $2,998 | $3,160 | $3,327 | $3,496 |
Principal and interest a month on a 30-year fixed loan. Property tax, insurance and any PMI come on top.
| $320,000 at 7.24% | A month | Total interest |
|---|---|---|
| 30 years | $2,181 | $465,090 |
| 15 years | $2,919 | $205,484 |
A 15-year loan costs more each month but saves a large share of the interest, and 15-year loans usually have lower rates than 30-year ones too.
How PMI works
Private mortgage insurance protects the lender, not you, when your down payment is under 20% on a conventional loan. It typically costs 0.3% to 1.5% of the loan a year, added to your monthly payment. Lenders must cancel it automatically when your balance is scheduled to reach 78% of the home’s original value, and you can ask to cancel it once you reach 80%. FHA loans have their own mortgage insurance with different rules: see the first-time home buyer guide.
Property tax by state
Property tax is often the biggest cost after principal and interest, and it varies more than anything else from state to state. Here’s what the typical homeowner pays, as a share of the home’s value:
| Highest | Rate | Lowest | Rate |
|---|---|---|---|
| Illinois | 1.92% | Hawaii | 0.27% |
| New Jersey | 1.89% | Alabama | 0.38% |
| Connecticut | 1.66% | Idaho | 0.43% |
| New Hampshire | 1.46% | Arizona | 0.43% |
| New York | 1.45% | South Carolina | 0.45% |
Across the US, it’s 0.89%. Each state’s page starts the calculator with its typical home price and property tax rate (from the Census Bureau’s 2024 American Community Survey).
Tips for a lower payment
- Put more down. A bigger down payment lowers the loan, and 20% removes PMI.
- Shop for your rate. Get quotes from several lenders: half a percent makes a difference for 30 years.
- Compare insurance. Homeowners insurance premiums vary between insurers for the same home.
- Check the property tax. Your county’s rate and any homestead exemption change the monthly cost. The property tax calculator compares every state.
- Pay extra when you can. Extra principal cuts the interest you pay and the time the loan takes.
Already own a home? See what refinancing would save with the refinance calculator, or what you could borrow against your equity with the HELOC calculator.
Not sure what price to aim for? Start with how much house you can afford, and budget for closing costs on top of the down payment: the first-time home buyer guide explains them.