How to Calculate Your Mortgage Payment in 2026

Buying a home is the largest financial decision most people make. Understanding exactly how your mortgage payment is calculated can save you tens of thousands of dollars.

What Is a Mortgage Payment?

A mortgage payment includes four components called PITI: Principal, Interest, Taxes, and Insurance. Principal is the amount you borrowed. Interest is the cost of borrowing. Property taxes average 1.1% of home value nationally. Homeowner's insurance costs $1,000-$3,000/year.

How Is the Monthly Payment Calculated?

The formula: M = P x [r(1+r)^n] / [(1+r)^n - 1]. Where P = loan amount, r = monthly rate, n = total payments. Add monthly taxes and insurance for your total PITI payment.

What Is PMI?

Private Mortgage Insurance is required when your down payment is less than 20%. It costs 0.3% to 1.5% of the loan annually. Request removal once you reach 20% equity; it auto-drops at 22%.

30-Year vs 15-Year in 2026

On a $400,000 loan: 30yr at 6.5% = $2,275/mo, $510K total interest. 15yr at 5.8% = $3,333/mo, $200K total interest. The 15-year saves over $310,000.

Real Example: $400,000 Home

With 10% down: Loan $360,000 | P&I: $2,275 | Tax: $367 | Insurance: $150 | PMI: $150 = $2,942/month total PITI

How to Lower Your Payment

• Put down 20% to eliminate PMI ($150/mo savings)
• Improve your credit score (680 to 760 = 0.5%+ rate reduction)
• Shop multiple lenders (rates vary 0.25-0.5%)
• Appeal your property tax assessment