What makes up the payment
Principal and interest come from the loan itself, calculated with the standard amortization formula. Property tax is usually a percentage of assessed value, varying enormously by location. Home insurance is a fixed annual premium spread monthly.
Many lenders collect tax and insurance into an escrow account alongside the loan payment, which is why the amount leaving your account exceeds the principal-and-interest figure a basic loan calculator shows.
The down payment decision
A larger down payment reduces the loan, the monthly payment and total interest, and in many markets a deposit of 20% or more avoids mortgage insurance entirely. Against that, a very large down payment ties up cash that could serve as an emergency fund or be invested.
Use the down payment slider to see the trade-off directly. The jump in affordability between 10 and 20% is usually larger than people expect.
Frequently asked questions
Does this include mortgage insurance?
Not as a separate line. If your deposit is under 20% you will likely pay mortgage insurance, so add that premium to the insurance field to approximate it.
What property tax rate should I use?
It varies hugely by location, from near zero to over 2% of value annually. Check your local authority's published rate for an accurate figure.
Should I choose a 15 or 30 year term?
Fifteen years means much higher payments but dramatically less total interest. Thirty years buys monthly breathing room at a substantially higher lifetime cost.
Is my mortgage interest tax deductible?
It depends entirely on your country and circumstances. Several countries offer relief on home loan interest; many do not. Check local rules.
How much house can I afford?
Use our home affordability calculator, which works backwards from your income and existing debts to a maximum sensible price.
What other costs should I budget for?
Closing costs, stamp duty or transfer tax, legal fees, survey and valuation, moving costs, and ongoing maintenance of roughly 1% of the property value per year.