How is a monthly mortgage payment calculated?

The monthly principal and interest payment uses the standard amortization formula: M = P × r(1+r)^n / ((1+r)^n − 1), where P is the loan amount, r is the monthly interest rate (annual rate ÷ 12), and n is the total number of monthly payments. Your full PITI payment also adds property taxes, homeowners insurance, PMI (if applicable), and any HOA dues.

PITI stands for Principal, Interest, Taxes, and Insurance — the four components of a typical monthly mortgage payment. Lenders use the total PITI amount when evaluating affordability, often capping it at 28% of your gross monthly income.

How much house can I afford?

A common rule is the 28/36 DTI rule: total housing costs should not exceed 28% of your gross monthly income, and total debt (housing + car loans + credit cards + student loans) should not exceed 36%. Use the Affordability tool on this site to estimate the maximum home price you can comfortably afford.

When does PMI drop off?

Private mortgage insurance is typically required when your down payment is less than 20%. By federal law, it automatically terminates once your loan-to-value ratio reaches 78% (i.e., you have 22% equity), and you can request cancellation at 80% LTV based on your original payment schedule.

Is it worth refinancing my mortgage?

A refinance generally makes sense when the monthly savings recoup the closing costs within the time you plan to stay in the home. A common rule of thumb is at least a 0.5%–1.0% rate drop. Use the Refinance tool on this site to compute your exact break-even point in months.

How are extra payments applied to a mortgage?

Extra monthly payments are applied directly to the loan principal, reducing the balance faster than scheduled. This shortens the loan term and saves significant interest. Even a small extra payment — for example, $100/month on a 30-year loan — can shave several years off the payoff date.

Illinois Mortgage Calculator

Estimate your Illinois mortgage payment using the state's 2.08% average effective property tax rate, $2,100/yr average home insurance, and Illinois's $260,000 median home price (Zillow ZHVI), with current 30-year fixed rates from Freddie Mac plus PMI and HOA. Illinois has the second-highest effective property tax rate nationally. Compare scenarios, view a full amortization schedule, and analyze whether it's better to rent or buy.

Median Home Price$260,000

Property Tax2.08%

Insurance / yr$2,100

StateIL

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