Not financial advice. Mortgage FV Calculator is a software calculator, not a personal-finance product or advisory service. It computes standard financial functions and displays the results for your convenience. Nothing here constitutes, or is intended to constitute, financial, investment, tax, legal, mortgage, credit, or insurance advice. Always consult a qualified professional before making any financial decision.

Mortgage glossary

By Knobugsoft Engineering · Knobugsoft LLC · Last reviewed August 14, 2026 · Methodology

Every term we use in the calculators, defined the way a lender or an analyst would use it — with the trade-off that matters, not just the dictionary meaning. 38 terms, grouped by where they appear in a housing decision.

Payment

PITI: Principal, interest, taxes and insurance — the true monthly housing payment.; Lenders qualify you on PITI, not on principal and interest alone. Property tax and homeowners insurance are usually collected monthly into an escrow account, and PMI and HOA dues are added on top where they apply. A payment quoted without escrow can understate the real cost by 20–40%.; Mortgage calculator
Bi-weekly payments: Half a payment every two weeks — 26 halves, or 13 monthly payments a year.; Nearly all the benefit comes from the extra full payment each year, not from faster compounding. Confirm the servicer applies each half immediately rather than holding it, and that there is no enrolment fee; otherwise send one extra payment a year yourself.; Bi-weekly calculator

Loan

Amortisation: The schedule that splits every payment between interest and principal.; Each scheduled payment first covers the interest accrued on the outstanding balance for that period; whatever remains reduces the principal. Because the balance falls each month, the interest share shrinks and the principal share grows, which is why early payments barely dent the balance and late payments barely cost interest.; Mortgage calculator
Principal: The amount you still owe, excluding interest.; Principal starts as the loan amount (purchase price less down payment) and falls with every payment and every extra payment. Interest is always charged on the current principal, so reducing principal early has an outsized effect on lifetime interest.; Overpayment calculator
Loan-to-value (LTV): Loan balance divided by property value, as a percentage.; LTV drives pricing, PMI and refinance eligibility. 80% is the classic threshold for avoiding mortgage insurance; below 75% and 70% many lenders offer further pricing improvements.; PMI calculator
APR: The rate including lender fees and points, expressed annually.; APR spreads origination fees, discount points and certain closing costs across the loan term, so it is a better cross-lender comparison than the note rate. It assumes you keep the loan to maturity, so it overstates the value of points if you move or refinance early.; Rates comparison
Note rate: The contractual interest rate used to compute your payment.; The note rate — not the APR — determines the actual monthly principal and interest amount and the interest accrued each period. Use the note rate in a calculator and the APR to compare offers.
Fixed-rate mortgage: The note rate never changes for the life of the loan.; Payment certainty comes at a price: fixed rates usually start above the initial rate of a comparable adjustable loan. The optionality is one-sided in your favour — you can refinance if rates fall, but the lender cannot raise your rate if they rise.
Adjustable-rate mortgage (ARM): A fixed introductory period, then periodic rate resets against an index.; A 7/6 ARM is fixed for seven years then adjusts every six months at the index plus a margin, bounded by initial, periodic and lifetime caps. ARMs make sense when your planned holding period is comfortably inside the fixed window and you can absorb the fully indexed payment if it is not.
Index and margin: The two components of an ARM's rate after the fixed period.; The index (commonly SOFR-based) moves with the market; the margin is a fixed spread set in your note. Fully indexed rate = index + margin, subject to caps. The margin never changes, so it is the part worth negotiating.
Prepayment penalty: A fee for paying off or paying down a loan early.; Rare on conforming US residential loans and prohibited on qualified mortgages after the first three years, but common on investor and non-QM products. Always confirm the prepayment terms before planning an overpayment strategy.; Early payoff calculator
HELOC: A revolving line secured by home equity, with a draw then repayment phase.; During the draw period (often 10 years) you can borrow and repay repeatedly, usually paying interest only at a variable rate. When the repayment phase starts, the balance amortises over the remaining term and the payment can jump sharply.; HELOC calculator
Term: The number of years over which the loan is scheduled to repay.; A 15-year term carries a higher payment and a lower rate, and costs far less interest overall. A 30-year term buys payment flexibility — you can always pay it like a 15-year loan, but you cannot do the reverse.; 15 vs 30 year

Costs

Escrow account: A lender-held account that collects and pays your tax and insurance bills.; You pay one-twelfth of the annual property tax and insurance each month; the servicer pays the bills when due. Escrow is re-analysed annually, so your monthly payment can change even on a fixed-rate loan when assessments or premiums rise.
PMI (private mortgage insurance): Insurance protecting the lender when the down payment is under 20%.; PMI typically costs 0.3%–1.5% of the loan per year, charged monthly. Under the Homeowners Protection Act, a lender must cancel borrower-paid PMI on request at 80% loan-to-value of the original value, and automatically at 78%. It protects the lender, not you.; PMI calculator
MIP: The FHA equivalent of PMI, with an upfront and an annual component.; FHA loans charge an upfront mortgage insurance premium financed into the loan plus an annual premium paid monthly. On most modern FHA loans with a low down payment the annual premium lasts the life of the loan, which is a common reason borrowers refinance to a conventional loan once they hold 20% equity.
HOA dues: Mandatory association fees for condos and planned communities.; HOA dues cover shared maintenance, amenities and reserves. They are not part of the loan and cannot be escrowed by most lenders, but they are counted in your debt-to-income ratio and they can rise sharply, plus special assessments for large repairs.
Discount points: Prepaid interest that buys down the note rate.; One point costs 1% of the loan amount and typically lowers the rate by 0.125–0.25 percentage points. Points pay off only if you keep the loan past the break-even month, which is the point cost divided by the monthly payment saving.; Rates comparison
Closing costs: One-off fees to originate and record the loan, typically 2%–5% of the price.; They include origination, appraisal, title insurance, recording, prepaid interest and initial escrow funding. Closing costs are the denominator of any refinance break-even calculation, and they are the largest hidden drag on short holding periods in rent-versus-buy analysis.; Refinance break-even
SALT cap: The federal limit on deducting state and local taxes, including property tax.; Because state income tax and property tax share one capped deduction, many owners in high-tax states get no marginal federal benefit from property tax at all. Check this before assuming mortgage interest and tax deductions reduce your effective payment.
Standard deduction: The flat deduction you take instead of itemising.; Mortgage interest only helps if your itemised total exceeds the standard deduction, and then only by the excess. At current thresholds many borrowers with moderate loan balances receive no tax benefit from mortgage interest whatsoever.

Investment analysis

Home equity: Market value minus everything secured against the property.; Equity grows from three sources: scheduled principal repayment, extra payments and price appreciation. Only the first two are under your control, which is why sound analysis separates them rather than assuming a growth rate.
Future value (FV): What a sum or a stream of contributions grows to at a given rate.; FV compounds a present amount plus any periodic contributions forward to a horizon. It is the right tool for the counterfactual in a payoff decision: what the money would be worth if invested rather than used to pay down the loan.; Future value calculator
Present value (PV): What a future amount is worth today at a chosen discount rate.; PV is the inverse of future value. It makes cash flows arriving at different times comparable, which is the foundation of NPV and of any honest rent-versus-buy comparison.
Net present value (NPV): The present value of all inflows less all outflows of a decision.; For a home purchase, NPV nets the down payment, monthly costs, tax effects, sale proceeds and selling costs against the rental alternative, all discounted to today. A positive NPV means the purchase beats the discount-rate alternative over that horizon.; NPV of buying a house
Internal rate of return (IRR): The discount rate at which a set of cash flows has zero NPV.; IRR expresses a decision as an annualised return, which is easy to compare with alternatives. It is unreliable when cash flows change sign more than once, so read it alongside NPV rather than instead of it.; Rental ROI calculator
Discount rate: The opportunity cost used to convert future money to today's money.; This site defaults to the US 10-year Treasury yield as a risk-free baseline. Use a higher rate if the realistic alternative is an equity portfolio; the result is very sensitive to this input, which is why it is exposed rather than hard-coded.
Opportunity cost: The return given up by tying money into one use instead of another.; The down payment and every extra principal payment carry opportunity cost. A payoff plan that beats a 6.75% mortgage rate risk-free may still lag a diversified portfolio over the same period — the comparison, not the interest saved alone, is the decision.; Early payoff calculator
Capitalisation rate: Net operating income divided by property value.; Cap rate measures unlevered yield and lets you compare rentals independently of financing. It excludes debt service, so a good cap rate can still produce negative cash flow at a high mortgage rate.; Rental ROI calculator
Cash-on-cash return: Annual pre-tax cash flow divided by cash invested.; Unlike cap rate, this is a levered measure: it reflects your actual down payment, closing costs and mortgage payment. It ignores appreciation and principal paydown, so pair it with IRR for the full picture.
Break-even horizon: How long you must hold before a decision turns net positive.; Buying versus renting, points versus no points and refinancing all have a break-even month. Compare it honestly with how long you expect to stay: most bad housing outcomes are timing mismatches, not pricing mistakes.; Rent vs buy

Process

Debt-to-income ratio (DTI): Monthly debt payments divided by gross monthly income.; Front-end DTI counts only housing (PITI plus HOA); back-end DTI adds car loans, student loans, minimum card payments and child support. Most conventional underwriting tolerates a back-end DTI up to roughly 45%, with exceptions above that for strong reserves or credit.
Rate lock: A commitment holding your quoted rate for a set number of days.; Typical locks run 30–60 days; longer locks and float-down options cost more in rate or fees. A lock protects against rate increases but is only as good as the closing date — extensions usually carry a fee.
Recast: Re-amortising after a lump sum, lowering the payment but keeping the payoff date.; A recast keeps your rate and term and simply recalculates the payment on the reduced balance, usually for a few hundred dollars in fees and no credit check. Compare it against keeping the old payment, which uses the same lump sum to shorten the term instead.; Recast calculator
Refinance: Replacing an existing loan with a new one, resetting rate and term.; A rate-and-term refinance lowers the cost of borrowing; a cash-out refinance also increases the balance. Both carry a full set of closing costs, so the decision hinges on the break-even month against your expected holding period.; Refinance break-even
Underwriting: The lender's verification of income, assets, credit and collateral.; Pre-qualification is an estimate, pre-approval involves document review, and full underwriting happens after you are under contract. Only a clear-to-close means conditions have been satisfied.
Appraisal gap: The shortfall when a property appraises below the contract price.; Lenders size the loan from the lower of price and appraised value, so the gap must be covered in cash, renegotiated, or the contract terminated under an appraisal contingency.
Seller concessions: Seller-paid closing costs or rate buydowns, within agency limits.; A temporary 2-1 buydown funded by concessions lowers the rate for the first two years only; the note rate underneath is unchanged. Model the payment after the buydown expires, not just the teaser payment.

Want these terms applied to real numbers? Read the scenario guides or check the methodology behind every calculation.

About the author

Quantitative finance engineering team, Knobugsoft LLC

Knobugsoft LLC builds financial calculation software. The same amortisation, time-value-of-money and discounted cash-flow engine that powers these guides serves the site's public API and is covered by an automated regression test suite run on every release.

• Amortisation and escrow modelling (principal, interest, taxes, insurance, PMI, HOA)
• Time value of money: future value, present value, NPV and IRR
• Rent-versus-buy and refinance break-even analysis

Every formula used on this site is documented on the methodology page. Spotted something wrong? Tell us — corrections are published with the review date updated.