Free US Mortgage Calculator: PITI, Amortization & DTI Ratios

The absolute minimum credit score for a conventional mortgage is 620 — the Fannie Mae / Freddie Mac floor. However, qualifying at 620 typically means you receive the highest available interest rate tier and the most restrictive loan-to-value limits.

For a 3% down payment (97% LTV conventional), most lenders require a minimum score of 640–660 in practice, even though Fannie Mae’s published minimum is 620. The higher the LTV, the higher the effective minimum score lenders enforce. For a 20% down (80% LTV) loan, many lenders are more flexible near the 620 floor.

Key 2026 note: Fannie Mae’s Desktop Underwriter (DU) and Freddie Mac’s Loan Product Advisor (LPA) now incorporate trended credit data and rental payment history in automated approval decisions — meaning strong rental payment history can offset a lower score in some cases.

Fannie Mae and Freddie Mac set the maximum back-end DTI at 45% for most conventional loans, with automated underwriting systems (DU/LPA) capable of approving up to 50% DTI when strong compensating factors are present — such as significant cash reserves, low LTV, or excellent credit score.

The DTI calculation uses gross monthly income (before taxes) in the denominator — not net take-home pay. Debts included are: minimum credit card payments, car loans, student loans, personal loans, child support/alimony, and all other monthly debt obligations. Do not include utilities, groceries, phone bills, or insurance.

Self-employed buyers: Lenders use the 2-year average of Schedule C net income (after business expenses), not gross 1099 receipts. This often significantly reduces the qualifying income figure — a key reason self-employed buyers should use Business Owner mode in this calculator.

The minimum down payment for a conventional loan is 3% through Fannie Mae’s HomeReady and Freddie Mac’s Home Possible programs, designed for first-time buyers and low-to-moderate income borrowers. Standard conventional loans require a minimum of 5% down for most borrowers.

The minimum down payment affects three costs simultaneously: the loan amount (and therefore P&I payment), the PMI rate, and the lender’s rate pricing. A jump from 5% to 10% down typically eliminates a full LLPA pricing tier, reducing your rate by 0.10–0.25% on top of the smaller loan amount benefit.

Gift funds: For owner-occupied homes with 20%+ down, 100% of the down payment can come from gift funds (from family members). For loans below 20% down, at least 3–5% of the down payment must come from the borrower’s own funds, depending on loan type.

Lenders require documentation to verify four categories: income, assets, identity/residency, and property. Preparing these in advance dramatically reduces processing time and reduces the risk of last-minute closing delays.

• Income: Last 2 years of W-2s or 1099s, last 2 years of federal tax returns (all pages), last 30 days of pay stubs, year-to-date P&L if self-employed
• Assets: Last 2–3 months of all bank statements (all pages, including blank pages), investment/retirement account statements, documentation for any large deposits
• Identity: Government-issued photo ID, Social Security number, 2-year residence history, 2-year employment history
• Property: Signed purchase agreement, homeowner’s insurance declaration, HOA documents (if applicable), landlord contact for rental history verification

Closing costs typically range from 2% to 5% of the loan amount on a purchase transaction. On a $382,500 loan, expect $7,650–$19,125. The wide range reflects regional variation in transfer taxes, title insurance rates, and lender fee structures.

Seller credits: You can negotiate for the seller to pay some or all of your closing costs. Fannie Mae allows seller credits up to 3% of the purchase price for LTV above 90%, and up to 6% for 75–90% LTV. This is a powerful strategy in buyer’s markets and can reduce your cash needed to close significantly.

An escrow account (also called an impound account) is a third-party account managed by your mortgage servicer. You pay 1/12 of your annual property tax and homeowner’s insurance premium into it each month as part of your mortgage payment. The servicer then pays these bills directly when they come due.

Is it required? For conventional loans with less than 20% down (LTV above 80%), lenders almost universally require escrow. For loans at 80% LTV or below, some lenders allow escrow waiver — but typically charge a 0.125–0.25% rate adjustment for the waiver privilege, since they lose the float income.

An origination fee (sometimes called an underwriting fee or processing fee) is the lender’s charge for creating and processing your loan. It is typically expressed as a percentage of the loan amount — most commonly 0.5% to 1.0%, though some lenders advertise “no origination fee” loans at slightly higher rates.

Yes, origination fees are negotiable — especially if you have excellent credit, a large down payment, or competing lender offers. The CFPB-standardised Loan Estimate (issued within 3 business days of application) breaks out origination fees in Section A. Compare Section A across all lenders you shop — lenders cannot increase Section A fees after the Loan Estimate is issued without a valid change-of-circumstance.

Discount points are prepaid interest. Each point costs 1% of the loan amount and typically reduces the mortgage rate by 0.20–0.25%. On a $382,500 loan, one point = $3,825 and saves approximately $48–$60/month.

2026 context: With rates at 6.43% and many analysts forecasting possible rate decreases of 0.50–1.00% over 2026–2027, buying points locks in today’s rate permanently. If rates drop and you refinance within 3–4 years, the points are lost money. In a falling rate environment, paying points is generally a losing strategy unless you have very high certainty of staying without refinancing for 7+ years.

Tax deduction: Discount points paid on a purchase mortgage are generally fully deductible in the year paid if you itemise deductions (IRS Publication 936). On a refinance, they must be amortised over the loan life.

Yes — mortgage interest on a primary residence is deductible on Schedule A if you itemise, subject to the following limits set by the Tax Cuts and Jobs Act (TCJA) of 2017, which remains in effect for 2026:

The practical reality in 2026: Most middle-income homeowners do NOT itemise. The standard deduction is now so high ($29,200 for married couples) that only buyers with large mortgages, high state/local tax (SALT) burdens, and significant charitable contributions exceed the threshold. For a $382,500 loan at 6.43%, year-1 mortgage interest is approximately $24,500 — well below the $29,200 standard deduction for a married couple, meaning most buyers will take the standard deduction and receive no incremental tax benefit from mortgage interest.

PMI (Private Mortgage Insurance) protects the lender — not you — if you default on the loan. It is required on conventional loans when the down payment is less than 20% (LTV above 80%). PMI does not provide you with any coverage or benefit; it is a cost imposed entirely for the lender’s risk management.

How to cancel PMI — three paths:

• Automatic cancellation: Under the Homeowners Protection Act (HPA 1998), lenders must automatically cancel PMI when the loan balance reaches 78% of the original purchase price through scheduled payments — no action needed from you.
• Requested cancellation: Once you reach 80% LTV based on original purchase price, you can request PMI removal in writing. The lender may require a good payment history (no 30-day late payments in 24 months) and may order an appraisal at your expense (~$500).
• Appraisal-based cancellation: If home values have increased, some lenders allow PMI removal at 80% LTV based on current appraised value — typically requiring the loan to be at least 2 years old (for 75% LTV) or 5 years old (for 80% LTV).

As of 2026, PMI deductibility is not currently active. The PMI deduction (which treated PMI premiums as deductible mortgage interest for itemisers with income below $110,000) expired after tax year 2021 and has not been permanently extended by Congress. It was reinstated annually through retroactive legislation several times, but no extension has been passed for 2022 onward as of the current 2026 tax year.

Always confirm with a qualified tax professional before filing. Tax law changes rapidly and any late-year Congressional action could affect your filing. The non-deductibility of PMI is one more reason to target 20% down and eliminate the cost entirely.

Lender-paid PMI (LPMI) is an arrangement where the lender pays your PMI premium upfront in exchange for charging you a higher mortgage interest rate — typically 0.20–0.50% higher than a standard rate. There is no separate monthly PMI line item, but the cost is embedded in your rate permanently.

When LPMI makes sense: If you plan to sell or refinance within 4–5 years (before normal PMI cancellation via amortisation), LPMI may result in lower total cost. However, if you stay long-term, borrower-paid PMI wins because you eventually cancel it while the LPMI rate premium remains forever. Tax note: unlike borrower-paid PMI, LPMI interest is part of the mortgage rate and may be deductible as mortgage interest if you itemise — a potential advantage when the PMI deduction is expired.

An 80-10-10 (piggyback) loan is a strategy to avoid PMI without a 20% down payment. You take out a first mortgage at 80% LTV (no PMI threshold), a second mortgage (HELOC or home equity loan) at 10% LTV, and put 10% down yourself. The total financing is 90% but the first mortgage is at exactly 80%, avoiding PMI.

2026 considerations: With prime rate elevated, second mortgage/HELOC rates are typically 7.5–9.5% — significantly above the first mortgage rate. The monthly second mortgage payment may exceed the PMI it replaces, especially for buyers with strong credit (low PMI rates). Run the numbers: if your PMI rate would be 0.50% on $382,500, that’s $159/month vs. a 10% second at 8.5% which is approximately $191/month. In this scenario, PMI is actually cheaper. The 80-10-10 makes more mathematical sense when PMI rates are high (poor credit, high LTV) or when rates on second mortgages are competitive.

PITI stands for Principal, Interest, Taxes, and Insurance — the four components of a full mortgage payment when an escrow account is required. Most buyers are quoted only the P&I figure but actually pay PITI monthly.

On a $450,000 home with 5% down in a median US market, the P&I payment of ~$2,700 often becomes a total PITI+PMI payment of $3,400–$3,800 once taxes, insurance, and PMI are included. This 25–40% gap between advertised P&I and true total cost is the most common budget shock first-time buyers experience.

This is the nature of amortisation — the mathematical process of paying off a loan with equal periodic payments. Each month, interest is calculated first on the remaining balance, and only the remainder of the fixed payment goes to principal reduction.

This is why extra payments in early years have disproportionate impact. Every extra dollar paid in Month 1 eliminates 30 years of compounding interest on that dollar. The same dollar in Month 300 eliminates only 5 years of interest. The calculator’s accelerated payoff feature models this month-by-month for complete accuracy.

Using 2026 rates (6.43%), a 10% down payment, and standard Fannie Mae thresholds (28% front-end, 43% back-end), the required income to stay within the 28% housing ratio is calculated from the total monthly housing cost — not just P&I.

For a conservative buyer (25% threshold), the required income rises to $169,000/year. Note that lender qualification is based on DTI using only P&I + taxes + insurance + PMI + HOA (not maintenance or utilities) — so lenders may approve at a lower income than what this total-cost calculation requires for true affordability.

These two terms are frequently confused and the distinction matters significantly when competing for homes in a tight market.

Prequalification is a quick estimate based on information you provide verbally or in a form — no documents verified, no credit check. It carries no commitment from the lender. Many sellers and agents no longer accept offers backed only by prequalification letters.

Preapproval involves a full credit pull, income/asset verification, and automated underwriting. The lender issues a conditional commitment letter stating the maximum loan amount. This is what most sellers expect in 2026. The condition is that the specific property appraises at or above the purchase price — your personal qualifications are already approved.

Most mortgages have a 15-day grace period after the due date before a late fee is charged. Payments received after the grace period but before 30 days late incur a late fee (typically 4–5% of the payment amount) but do NOT trigger a credit bureau delinquency report.

If you’re facing hardship, contact your servicer before missing a payment. Loss mitigation options — forbearance, loan modification, repayment plans — must be offered by servicers on federally backed loans (Fannie/Freddie, FHA, VA) before foreclosure can proceed. Proactive communication nearly always leads to better outcomes than avoidance.

This is the most consequential financial strategy question for homeowners in 2026 — and the answer is genuinely nuanced. With 30-year conventional rates at 6.43%, the guaranteed return of paying down the mortgage is significant but competes with potential equity market returns.

The practical 2026 framework: (1) Always get 100% of employer 401k match first — it is a guaranteed 50–100% return. (2) Max Roth IRA ($7,000) for tax-free compound growth. (3) For remaining surplus, the mortgage payoff vs invest decision depends on your risk tolerance, tax bracket, and time horizon. At 6.43%, paying down the mortgage is a strong guaranteed return. Above 7.0% mortgage rates, the case for paying down strongly dominates. Below 5%, investing historically wins more reliably. At 6.43%, it is a genuine toss-up for most investors.

A bi-weekly payment plan works by paying half your monthly mortgage payment every two weeks instead of one full payment monthly. Because there are 52 weeks in a year, you make 26 half-payments = 13 full payments per year instead of 12 — effectively one extra payment per year.

Important warning: Many banks charge $300–$500 to set up an “official” bi-weekly plan — avoid this. Instead, simply make one extra principal payment per year (in December or whenever cash flow allows). The mathematical result is identical. Always confirm extra payments are applied to principal, not advanced to the next interest payment.

The classic refinancing rule of thumb — “refinance when rates drop 1%” — is overly simplistic. The correct analysis is always a break-even calculation: divide the closing costs of the refinance by the monthly savings to find how many months it takes to recoup the cost.

2026 rate outlook context: With the Federal Reserve signalling potential rate cuts, some buyers who locked at 6.5–7.5% in 2023–2024 may have refinancing windows opening. However, no-cost refinancing (where closing costs are rolled into the rate) shifts the break-even analysis entirely — the lower-rate loan begins saving money immediately but the lifetime cost may be higher. Use our Refinance Savings Calculator to model your exact scenario.

The core trade-off is monthly cash flow vs. total cost and equity speed. Both are amortising loans with fixed monthly payments — the term length changes everything about how quickly equity builds and how much interest you pay.

15-year is better if: You can comfortably absorb the higher payment (confirmed no stress flags in this calculator), you are within 15–20 years of retirement and want a paid-off home, or you are in a higher tax bracket and the larger interest deduction from a 30-year adds minimal benefit.

30-year is better if: Monthly cash flow is tight, you have high-interest debt to eliminate first, your employer offers a strong 401k match you’re not yet fully utilising, or you have variable income (self-employed) and value payment flexibility. The difference in monthly payment ($782) invested monthly at 7% for 15 years grows to ~$248,000 — partially offsetting the 15-year’s interest savings.

An ARM (Adjustable-Rate Mortgage) has a fixed rate for an initial period (typically 5, 7, or 10 years), then adjusts annually based on a market index (currently SOFR) plus a lender margin. A 7/1 ARM means fixed for 7 years, then adjusts every 1 year.

When ARMs make sense in 2026: If you are confident you will sell or refinance within the fixed period (5 or 7 years), an ARM captures a lower rate without the rate-adjustment risk. With rates at 6.43% and potentially heading down, there is also the argument that an ARM buyer benefits from both the initial lower rate AND future rate decreases. However, if rates spike unexpectedly, an ARM buyer is exposed — caps limit but don’t eliminate the risk. For buyers who plan to stay 10+ years, a 30-year fixed eliminates all rate uncertainty and is generally recommended.

These are the five most costly, most common mistakes identified by mortgage professionals in 2026 — each avoidable with proper planning and the right tools.

• 1. Budgeting from P&I only. Seeing a $2,400/month payment and budgeting for $2,400 when the true PITI + PMI + HOA + reserves is $3,600. This calculator exists specifically to close this gap.
• 2. Applying with only one lender. Missing a rate that is 0.40–0.60% lower — worth $40,000+ on a median loan. CFPB data shows 77% of buyers never shop beyond their first lender.
• 3. Opening new credit before closing. Taking out a car loan or new credit card after preapproval changes the DTI and can kill the loan days before closing. Do not open any new credit accounts from preapproval through closing day.
• 4. Draining savings for the down payment. Putting every last dollar into the down payment and arriving at closing with zero reserves. Lenders flag thin reserves; a broken furnace in Month 2 becomes a financial crisis.
• 5. Ignoring the PMI cancellation date. Paying $223/month PMI for 7–9 years because no one told them they could request cancellation at 80% LTV — or use home appreciation to remove it even earlier.