The formulas and assumptions behind every result.
Monthly principal & interest 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 ÷ 12), and n is the total number of monthly payments. This is the formula referenced in CFPB regulation Z and used by all US mortgage servicers.
Private mortgage insurance is applied when the loan-to-value ratio exceeds 80% at origination. Rate is user-configurable; typical range is 0.3–1.5% of the loan amount annually. Under the federal Homeowners Protection Act, PMI is automatically terminated at 78% LTV based on the original amortization schedule.
User-entered annual amounts are divided by 12 to compute the monthly escrow contribution. We do not automatically look up county-level rates on the primary calculator; state-level property tax pages will do so.
Break-even (in months) = Closing costs ÷ (Old P&I − New P&I). Lifetime savings compares total interest paid under both loans, net of the closing costs paid upfront. Assumes fixed rate on both loans and no prepayment.
We apply the 2026 IRS marginal-bracket schedule (inflation-adjusted from the 2024 TCJA baseline) after subtracting pre-tax 401(k) and HSA contributions and the applicable standard deduction. Itemized deductions and above-the-line adjustments are not modeled, for a personalized estimate, consult a CPA.
We currently model state income tax using each state's headline top rate applied to a simplified taxable base (gross − pre-tax deductions − half the federal standard deduction). This is a reasonable estimate for most middle-income filers but does not capture progressive brackets, credits, or local taxes. Full state-by-state bracket support is on our roadmap.
Our calculators are educational estimates. They intentionally simplify some real-world complications (AMT, phaseouts, local surtaxes, escrow adjustments). For personalized planning, please consult a licensed loan officer, CFP®, or CPA.