Mortgage and Loan Basics: What You Need to Know

A typical monthly mortgage payment can include principal (paying back the loan), interest (cost of borrowing), and sometimes property tax, insurance, and HOA fees. Lenders often refer to “P&I” (principal and interest) as the core payment.

The amount you borrow (principal) depends on the home price minus your down payment. The interest rate (APR) and the loan term (e.g. 25 or 30 years) determine how much you pay each month in P&I.

A larger down payment means a smaller loan and usually a lower monthly P&I. Putting down less than 20% often means you’ll pay PMI (private mortgage insurance) until you reach a certain equity level.

Example: $400,000 home with 20% down = $320,000 loan. With 10% down you’d borrow $360,000 and likely pay PMI on top.

A lower rate means lower monthly P&I for the same loan amount. A shorter term (e.g. 15 years instead of 30) means higher monthly payments but less interest over the life of the loan.

Rates are quoted as an annual percentage (APR). The calculator converts that to a monthly rate for the standard amortization formula.

Many homeowners pay property tax and insurance (and sometimes HOA) monthly alongside P&I. These are not part of the loan itself but affect your total monthly housing cost. Our mortgage calculator lets you add optional monthly amounts for tax, insurance, and HOA so you can see a total payment estimate.

The same idea applies: you borrow a principal, pay interest at a given rate, and make fixed payments over a term. Use a loan calculator to see monthly payment, total interest, and payoff time. For savings or investments with compound growth, use a compound interest calculator to see how balance grows over time.

Use our Mortgage Calculator for home price, down payment, rate, term, and optional tax/insurance/HOA. Use the Loan Calculator for other loans (personal, auto, etc.). Use the Compound Interest calculator for savings. All are free and run in your browser.