What is principal and interest on a mortgage?

Principal is the amount you borrow; interest is the cost of borrowing. Your monthly principal and interest (P&I) payment is the portion that goes toward repaying the loan. It does not include property taxes, insurance, or mortgage insurance.

P&I is determined by the loan amount, interest rate, and term. On a fixed-rate loan it doesn’t change; on an ARM it can change after the initial fixed period. When comparing quotes, P&I lets you compare the cost of the loan itself across lenders.

Your total monthly payment to the lender usually includes P&I plus escrow for taxes and insurance, and sometimes mortgage insurance. When you compare offers, look at both P&I and total payment so you can budget accurately.

Enter each lender’s quote into a comparison view to see P&I and total monthly payment side by side.