Principal and interest
We use the standard fixed-rate amortization formula for monthly principal and interest:
M = P · r(1 + r)n / ((1 + r)n − 1)
- M— monthly principal & interest payment
- P — loan amount (home price minus down payment)
- r — monthly interest rate (annual rate ÷ 12 ÷ 100)
- n — number of monthly payments (term years × 12)
If the rate is zero, we divide the loan amount evenly across the term. Amortization schedules allocate each payment between interest (rate × remaining balance) and principal (payment minus interest).
Taxes, insurance, PMI, and HOA
The full monthly payment adds escrow-style items on top of principal and interest:
- Property tax: home price × annual tax rate ÷ 12
- Homeowners insurance: annual premium ÷ 12
- PMI: when down payment is under 20%, annual PMI rate × loan amount ÷ 12; otherwise $0
- HOA: monthly dues as entered
FHA annual MIP and conventional PMI are modeled with the PMI rate field for estimation. Upfront FHA MIP and VA funding fees are not automatically financed into the balance unless you adjust inputs to reflect them — we call that out on loan-type pages.
Affordability mode
Affordability mode works backward from income and debts using common debt-to-income guidelines (about 28% of gross income for housing and about 36% for total debt). The result is a planning ceiling, not an underwriting decision. Lenders may allow higher or require lower ratios based on credit, reserves, and loan program.
State defaults
State calculator pages pre-fill indicative median home prices, average effective property tax rates, and average homeowners insurance premiums. These are starting points for education — not assessed values, appraisal opinions, or binder quotes. County mill rates, homestead exemptions, wind/flood endorsements, and HOA dues can move your real escrow far from the statewide average.
Rate data
When live rate feeds are available, we surface national averages from public market sources (including Freddie Mac / FRED series) and label the as-of date. Fallback defaults use 6.75% as of June 2026. Your locked rate will differ based on credit, loan type, points, and lender pricing.
What we do not claim
- We are not a lender, broker, or credit decisioning system.
- Results are not Loan Estimates, Closing Disclosures, or offers to lend.
- We do not guarantee that a payment will qualify you with any particular lender.
- Editorial guides are educational. Confirm taxes, insurance, and assistance programs with primary sources.