The math behind this calculator (click to expand)
The principal and interest portion of your mortgage payment uses a standard amortization formula:
M = P × [r(1+r)n] / [(1+r)n − 1]
Where P is the loan principal, r is the monthly interest rate (annual rate ÷ 12), and n is the total number of payments. On a $348,750 loan (90% of $387,500) at 6.75% for 30 years, r = 0.005625 and n = 360, giving a monthly P&I payment of $2,262. The remaining portion of your payment (taxes, insurance, and potentially PMI) gets added on top.
Early in the loan, most of each payment goes to interest. In month one of this example, $1,962 goes to interest and only $300 to principal. By year 15, the split is roughly even. By year 28, nearly the entire payment reduces the balance.
Implementation by Michael.
PMI: The 78% vs. 80% LTV Distinction
Private mortgage insurance is required on conventional loans with less than 20% down. On a $348,750 loan, PMI typically runs 0.5% to 1.5% of the loan amount annually - between $145 and $436/month. The rate depends on your credit score, LTV ratio, and loan type.
Two LTV thresholds matter. At 80% LTV, you can request PMI removal, but your lender may require a new appraisal and a history of on-time payments. At 78% LTV, the Homeowners Protection Act requires automatic cancellation based on your original amortization schedule - no request needed. On the $348,750 loan at 6.75%, you hit 78% of the original value (balance of $302,250) around month 103 - roughly 8.5 years in.
If your home has appreciated significantly, you can refinance or request a new appraisal to demonstrate you've crossed 20% equity sooner. In a market where home prices have risen 5% annually, that $387,500 home could appraise at $430,000+ within three years, pushing your effective LTV well below 80%.
What a Quarter-Point Rate Change Actually Costs
As of March 2026, 30-year fixed rates hover around 6.75%. Each 0.25% change in rate moves your monthly P&I payment by approximately $58 on a $348,750 loan. Over 30 years, that 0.25% difference adds up to about $20,800 in total interest.
At 6.50%, the monthly P&I drops to $2,204. At 7.00%, it rises to $2,320. At 7.50%, you're looking at $2,439 - $177 more per month than at 6.75%, or $63,720 over the life of the loan. That context matters when deciding whether to lock a rate today or float for a potential drop.
15-Year vs. 30-Year: Running the Numbers
The 15-year term typically carries a rate about 0.5% to 0.75% lower than the 30-year. Using $348,750 at 6.0% (15-year) vs. 6.75% (30-year):
- 30-year at 6.75%: $2,262/month P&I, $465,570 total interest
- 15-year at 6.0%: $2,943/month P&I, $181,040 total interest
The 15-year term costs $681 more per month but saves $284,530 in interest. You own the home free and clear in half the time. The tradeoff: that extra $681/month invested in the S&P 500 at a historical 10% average annual return would grow to roughly $284,000 over the same 15 years. The gap is slim - which means the decision often comes down to risk tolerance and whether you'd actually invest the difference consistently.
Property Tax Rates Vary More Than You'd Expect
On a $387,500 home, property taxes range dramatically by state:
- New Jersey (2.23% average): $8,641/year - $720/month added to your payment
- Texas (1.60% average, no state income tax): $6,200/year - $517/month
- California (0.71% average, Prop 13 limits increases): $2,751/year - $229/month
- Hawaii (0.27% average): $1,046/year - $87/month
That's a $633/month spread between New Jersey and Hawaii on the same-priced home. Tax rates also vary within states - a home in suburban Chicago faces rates above 2.5%, while downstate Illinois averages closer to 1.8%. Always check the specific county or municipality, not just state averages. Our State Tax & Housing Comparison tool lets you compare all 50 states side-by-side on an interactive scatter plot.
Larger Down Payment vs. Investing the Difference
Putting 20% down ($77,500) on a $387,500 home eliminates PMI and reduces your loan to $310,000. Compared to 10% down ($38,750), you're tying up an extra $38,750 in the house. Here's the math for each scenario over 30 years at 6.75%:
- 10% down: $348,750 loan, $2,262 P&I + ~$218 PMI for ~8 years = higher total cost
- 20% down: $310,000 loan, $2,011 P&I, no PMI = lower total cost
The 20% path saves roughly $251/month in P&I and eliminates $218/month in PMI - about $469/month total at the start. But that $38,750 invested in a diversified index fund averaging 8% annually would grow to approximately $387,000 over 30 years. The invested scenario wins if your returns exceed your mortgage rate after tax benefits, which historically has been the case more often than not. However, the guaranteed return of eliminating PMI (effectively a 6 to 8% cost of capital) makes the first 8 years more favorable for the larger down payment.
What might change in the next 24 months
A few moving pieces will shape what your number looks like soon. The 2026 conforming loan limit is $806,500 in most counties (FHFA), up from $766,550 in 2024 - a $40K-plus jump that pulled some borderline loans back from jumbo into conforming territory and cut their effective rate by roughly 0.25%. The Federal Reserve's path on the policy rate continues to set the baseline for the 30-year mortgage rate, and as of March 2026 the average sits near 6.75% (Freddie Mac PMMS).
The TCJA SALT cap stayed at $10,000 in the 2026 extension, which still bites in high-property-tax states like New Jersey, Illinois, and New York where state and local taxes regularly exceed that ceiling. That affects the after-tax cost of homeownership more than the headline mortgage rate does. Property tax assessments also lag market price by 12 to 24 months in most counties, so a home you bought in 2024 may see its assessed value catch up in late 2026 or 2027.