// accounting › Loans & Debt
Total monthly mortgage payment broken into principal & interest, tax and insurance.
M = P·r(1+r)^n / ((1+r)^n − 1) + T + I
More than just the loan. A typical monthly payment bundles principal and interest (repaying the loan plus the lender's charge) with a slice of your yearly property tax and home insurance. Lenders often call this combined figure PITI.
It uses the standard repayment formula on the amount you actually borrow — the home price minus your deposit. The monthly rate is the annual rate divided by 12, and the term is the number of years times 12 months.
Because they are not loan costs — they are ongoing charges on the property that don't shrink as you repay the loan. Seeing them separately stops you from mistaking the true cost of owning for just the loan repayment.
The whole pie is one month's payment. The largest slice is usually principal and interest; the smaller slices are the monthly share of property tax and insurance. Raising the tax or insurance figures grows their slices without touching the loan.
Budgeting before you buy — a $500,000 home with $100,000 down at 6% over 30 years is roughly $2,398 in principal and interest, before tax and insurance. Comparing suburbs — two homes at the same price can have very different payments once council rates and insurance differ. Refinancing — re-running the numbers at a new rate shows the monthly saving instantly.