What the monthly payment is made of
Principal and interest pay off the loan itself: the home price less the down payment. Property tax and home insurance are usually collected by the lender each month and paid for you. PMI is added when the down payment is under 20%. HOA fees, where there are any, are paid separately but are part of what the home costs each month.
PMI
Private mortgage insurance protects the lender when you put down less than 20%. Here it is charged at the yearly rate you set on the amount borrowed, and stops in the month the balance reaches 78% of the home price, the point at which US law says it must end automatically on most loans. You can often ask for it to be removed earlier, at 80%.
Taxes and insurance change
Property tax and insurance are shown at today's figures, but both usually rise over the years, so the true payment later on will likely be higher. The principal and interest part stays the same for a fixed-rate loan.
Questions
What down payment do I need?
It depends on the loan. Many conventional loans allow as little as 3% to 5% down with PMI; 20% down avoids PMI. Government-backed loans have their own rules and their own insurance, which this calculator does not model.
Is this what the bank will charge me?
No. It is an estimate for planning. Rates, fees, taxes and insurance all vary; the lender's Loan Estimate is the document to rely on.
Does it include closing costs?
No. Closing costs are paid once, at the start, and are not part of the monthly payment.