What is included in the payment?
The loan payment pays back the amount borrowed and interest. Property taxes and homeowners insurance are separate costs; divide their yearly amounts by 12 to budget for them. This calculator adds those two estimates to the loan payment, but does not include mortgage insurance, HOA dues, maintenance, or closing costs.
A worked example
For a $250,000 home with $50,000 down, you borrow $200,000. At a 6% fixed annual rate over 30 years, principal and interest are about $1,199.10 a month. Add $3,000 in annual property tax and $1,200 in annual insurance, and the monthly planning total is about $1,549.10.
How the mortgage formula works
The monthly loan payment is P × r ÷ [1 − (1 + r)^−n], where P is the principal, r is the annual interest rate divided by 12 and by 100, and n is the number of monthly payments. At zero interest, the payment is simply P ÷ n.
What to check before relying on the estimate
Taxes and insurance can change. The interest rate stays constant in this model, so it does not describe an adjustable-rate loan after its rate changes. Enter the note interest rate rather than APR, which can include other borrowing costs.
Source: CFPB: interest rate and APR.