Mortgage Calculator 2026

The standard rule is to keep your total housing payment (PITI — principal, interest, taxes, and insurance) below 28% of your gross monthly income, and total debt below 36%. On a $90,000/yr salary ($7,500/month gross), that means max housing payment of ~$2,100/month. At 6.8% APR on a 30-year loan with 20% down, $2,100/month supports roughly a $320,000 home price. Lenders will also consider your credit score, down payment, and existing debt.

The interest rate is the base cost to borrow the principal. APR (Annual Percentage Rate) includes the interest rate plus most lender fees (origination points, mortgage broker fees, some closing costs) — annualized over the loan term. APR is always at least as high as the interest rate. When comparing mortgages, use APR to compare apples-to-apples. A mortgage with a lower rate but high points may have a higher APR than a no-points mortgage at a higher rate.

30-year: lower monthly payment, more cash flow flexibility, but significantly more total interest paid. 15-year: higher monthly payment (typically 30–45% more), much less total interest, faster equity build-up, and usually a lower interest rate (0.5–0.75% less in 2026). Example on a $350,000 loan: 30-year at 6.8% = $2,284/mo, $472K total interest. 15-year at 6.1% = $2,976/mo, $186K total interest — saving $286,000. If you can comfortably afford the 15-year payment, it's almost always the financially superior choice.

PMI (Private Mortgage Insurance) is required when your down payment is less than 20% of the home price. It protects the lender — not you — if you default. Cost: typically 0.2–2% of the loan annually, added to your monthly payment. Under the federal Homeowners Protection Act, you can request PMI cancellation when your loan balance reaches 80% of the original home value. Lenders must automatically cancel PMI at 78% LTV. Paying down extra principal accelerates this.

On a $350,000 mortgage at 6.8% APR (30-year): base payment is $2,284/month, total interest is $472,240. Adding $200/month (paying $2,484): you'd pay off in about 24 years and 6 months instead of 30 — saving ~5.5 years and approximately $96,000 in interest. Extra payments are most powerful in the early years when the balance — and therefore the interest accruing — is highest.

Closing costs typically run 2–5% of the loan amount. On a $350,000 purchase, expect $7,000–$17,500 in closing costs. Common items: loan origination fee (0.5–1%), appraisal ($400–$700), title insurance ($500–$1,500), title search ($200–$400), recording fees ($50–$250), prepaid interest, property tax escrow (2–3 months), homeowner's insurance prepaid, and state-specific fees. Some lenders offer 'no-closing-cost' mortgages — but those costs are rolled into a higher rate.

An escrow account is a third-party account managed by your lender that collects a portion of your property taxes and homeowner's insurance with each monthly payment. Instead of paying a large annual property tax bill yourself, the lender collects 1/12 of your estimated annual tax and insurance each month, then pays these bills on your behalf when due. Most lenders require escrow when your down payment is less than 20%. Your escrow payment is recalculated annually based on actual tax and insurance costs — this is why your total monthly payment can change year to year even on a fixed-rate mortgage.

Refinancing replaces your current mortgage with a new loan, typically to get a lower interest rate, lower monthly payment, shorter term, or cash out equity. Break-even rule: divide your closing costs by your monthly savings to find how many months until you recoup the cost. Example: $4,000 in closing costs saving $150/month = 26-month break-even. If you plan to stay longer than that, refinancing likely makes sense. Generally worth it when you can lower your rate by 0.75%+ and plan to stay in the home 3+ more years. Watch out for resetting your amortization clock — refinancing a 10-year-old loan back to 30 years can increase total interest even with a lower rate.