How US mortgage payments work
A US fixed-rate mortgage payment covers four things — often called PITI: Principal, Interest, property Taxes, and Insurance. If your down payment is under 20%, lenders also add PMI (private mortgage insurance).
Monthly compounding
Unlike Canada (which compounds semi-annually), US mortgages compound monthly — the annual rate is simply divided by 12. Over a 30-year loan, interest is the largest single cost, often exceeding the home's price.
PMI — private mortgage insurance
Put down less than 20% and you'll pay PMI, roughly 0.4%–1% of the loan per year, until you build 20% equity. Putting 20% down avoids it entirely.
Frequently asked questions
How much house can I afford?
A common guideline keeps total housing costs under about 28% of gross monthly income. Adjust the home price until the monthly payment fits that.
Why is my payment different from another calculator?
Usually PMI, taxes, or insurance assumptions — or a calculator using a different compounding method. This tool shows the full PITI breakdown so you can see each piece.