How it works
Enter a home price and down payment in the same currency. Use a nominal fixed annual interest rate and the full repayment term. Add annual property tax and home insurance, plus monthly association fees and mortgage insurance if applicable. The main result is a housing-cost estimate; the repayment schedule covers the loan only.
Formula
P = Home price − Down payment; r = Annual interest rate ÷ 1200; n = Loan term (years) × 12; M = P × r ÷ [1 − (1 + r)⁻ⁿ]; r = 0 → M = P ÷ n.
Worked example
For a home price of 400,000, an 80,000 down payment and a 30-year loan at an illustrative 6.5%, principal and interest are $2,022.62 per month. With 3,600 annual tax, 1,200 annual insurance and 100 monthly association fees, the modeled housing cost is $2,522.62.
Assumptions and limitations
The model assumes equal monthly payments and interest at the annual nominal rate divided by 12. Taxes, insurance and monthly fees stay constant. Mortgage insurance is entered manually and is not automatically cancelled at an equity threshold. Closing costs, maintenance, utilities, rate resets and local compounding rules are excluded.
Local rates and lending rules
Enter a lender’s nominal interest rate, not APR. This model divides it by 12 and assumes monthly payments. Fees, eligibility, compounding conventions and tax rules vary by country.
Sources and methodology
- CFPB — Principal, interest and total monthly payment
- CFPB — Understanding a Loan Estimate
- CFPB — Debt-to-income ratio
- CFPB — Compare loan offers
Sources checked 2026-10-26
Frequently asked questions
Is the monthly housing cost the same as my loan payment?
No. Principal and interest repay the loan. Property tax, insurance and association fees are separate ownership costs, whether paid through escrow or directly. Confirm the lender’s actual payment and billing arrangements.
Amounts are illustrative. Not financial advice or a lender quote.