Certified Financial Planner with 15 years of experience in mortgage lending and personal finance advisory.
Welcome to the authoritative **Mortgage Payment Calculator**. Use this tool to quickly estimate your monthly principal and interest payment, as well as the total interest you will pay over the life of the loan. Simply enter your **loan amount**, the expected **annual interest rate**, and the **loan term** in years to get an instant, detailed breakdown.
Mortgage Payment Calculator
Mortgage Payment Formula
The standard monthly payment ($M$) for a fully amortizing loan is calculated using the following formula:
$$M = P \left[ \frac{r(1+r)^n}{(1+r)^n – 1} \right]$$
Formula Source: NerdWallet.com
- $M$: The monthly payment amount (Principal and Interest).
- $P$: The principal loan amount (the initial amount borrowed).
- $r$: The monthly interest rate (Annual Rate / 12 / 100).
- $n$: The total number of payments (Loan Term in years × 12).
Related Calculators (Internal Links)
Explore these linked calculators to dive deeper into specific loan strategies and savings goals:
- Bi-weekly mortgage payment savings calculator
- Mortgage payoff calculator extra principal
- Home affordability calculator based on DTI
- Refinance break-even point calculator
What is a Mortgage Payment?
A mortgage payment is a regular installment paid by a borrower to a lender. It primarily consists of two components: **Principal** and **Interest** (P&I). The principal is the portion that reduces the remaining loan balance, while the interest is the cost of borrowing the money. In the early years of a mortgage, a larger percentage of the payment goes toward interest.
While this tool calculates the P&I portion, a true monthly housing payment (often called PITI) usually includes **Property Taxes**, **Homeowner’s Insurance**, and potentially **Private Mortgage Insurance (PMI)** if the down payment is less than 20%. These are often collected into an escrow account by the lender to ensure timely payment.
How to Calculate a Mortgage Payment (Example)
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Gather Inputs
Let’s use an example: a **$200,000** loan amount, a **5%** annual interest rate, and a **30-year** term.
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Calculate Monthly Rate (r)
Convert the annual rate to a monthly decimal rate: $5\% / 12 / 100 = 0.004167$
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Calculate Total Payments (n)
Determine the total number of payments: $30 \text{ years} \times 12 \text{ months/year} = 360 \text{ payments}$.
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Apply the Formula
Input these values into the amortization formula. In this example, the resulting monthly P&I payment ($M$) is **$1,073.64**.
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Determine Total Interest
Multiply the monthly payment by the total number of payments, then subtract the principal: $(\$1,073.64 \times 360) – \$200,000 = \$386,510.40 – \$200,000 = \text{\textbf{\$186,510.40}}$ in total interest.
Frequently Asked Questions (FAQ)
No, this calculator only computes the required Principal and Interest (P&I) payment. To get your full housing cost (PITI), you will need to estimate your monthly property tax and insurance payments and add them to the P&I result.
What is amortization?Amortization is the process of paying off debt over time in fixed installments. Early payments are heavily weighted towards interest, but as the loan ages, more of each payment goes toward reducing the principal balance.
How does a bi-weekly payment save me money?By making a payment every two weeks (26 half-payments per year), you end up making one extra full monthly payment annually. This extra principal accelerates the payoff schedule and significantly reduces the total interest paid over the life of the loan.