Real Estate Finance Specialist and Chartered Financial Analyst (CFA) with over 15 years of experience in mortgage-backed securities and residential lending.
Use our **Mortgage Payment Calculator** to quickly estimate your monthly principal and interest payment, as well as the total interest paid over the life of the loan. Enter the **Loan Amount**, **Annual Interest Rate**, and **Amortization Period (Years)** below to get started.
Mortgage Payment Calculator
Mortgage Payment Formula
- **$M$**: Monthly Mortgage Payment
- **$P$**: Principal Loan Amount (The amount borrowed)
- **$i$**: Monthly Interest Rate (Annual Rate divided by 12)
- **$n$**: Number of Payments (Loan Term in years multiplied by 12)
Formula Source: NerdWallet
Related Loan Calculators (Internal Links)
Explore these related calculators to plan your home financing strategy:
- PMI Inclusion: Mortgage Payment Calculator with PMI
- Loan Type: FHA Loan Mortgage Payment Calculator
- Payoff Strategy: Bi Weekly Mortgage Payment Savings Calculator
- Affordability: Debt to Income Ratio Mortgage Calculator
What is a Mortgage?
A mortgage is a loan used to buy or maintain a home, land, or other types of real estate. The borrower agrees to pay the lender over a set period of time, typically **15 or 30 years**. The key difference between a mortgage and other loans is that the property itself serves as **collateral**. This means if the borrower stops making payments, the lender has the right to repossess (foreclose on) the property.
The monthly mortgage payment usually consists of four components, often referred to as PITI: **Principal** (the amount you borrowed), **Interest** (the cost of borrowing the money), **Taxes** (property taxes), and **Insurance** (homeowner’s insurance and sometimes Private Mortgage Insurance or PMI). This calculator focuses on the Principal and Interest (P&I) portion.
How to Calculate a Mortgage Payment (Example)
Let’s calculate the payment for a **$250,000 loan** at an **Annual Interest Rate of 6%** over **30 years**.
- Determine the Variables
Loan Amount ($P$): $250,000. Annual Rate: 6%. Loan Term: 30 years.
- Calculate Monthly Interest Rate ($i$)
The annual rate must be divided by 12: $i = 0.06 / 12 = 0.005$.
- Calculate Total Number of Payments ($n$)
The term in years multiplied by 12: $n = 30 \times 12 = 360$ payments.
- Plug into the Formula
$$ M = 250,000 \left[ \frac{0.005 (1 + 0.005)^{360}}{(1 + 0.005)^{360} – 1} \right] $$
- Calculate the Monthly Payment
The resulting monthly Principal & Interest payment is approximately **$1,498.88**.
Frequently Asked Questions (FAQ)
P&I stands for Principal and Interest—the core components calculated by the amortization formula. PITI stands for Principal, Interest, Taxes, and Insurance. The PITI amount is your actual total monthly outlay as a homeowner.
Why does my first payment contain so much interest?Mortgage interest is calculated on the remaining principal balance. Since the balance is highest at the beginning of the loan, the majority of your early payments go towards interest, with very little reducing the principal.
Does this calculator include PMI?No, this basic calculator only computes the Principal and Interest (P&I). Private Mortgage Insurance (PMI) is a separate premium required if your down payment is less than 20%, and must be manually added to the P&I result.