Senior Mortgage Analyst with 15+ years of experience in residential and commercial lending.
Use this mortgage calculator to estimate your monthly mortgage payment (P&I). You will need the home’s price, your down payment amount, the loan term (in years), and the estimated annual interest rate.
Mortgage Calculator
Mortgage Payment Formula
Formula Source: Investopedia
- M = Your monthly mortgage payment (Principal & Interest)
- P = The principal loan amount (Home Price minus Down Payment)
- i = Your monthly interest rate (Your annual rate divided by 12)
- n = The number of payments over the life of the loan (Loan Term in years multiplied by 12)
Related Calculators
- Amortization Calculator
- Home Affordability Calculator
- Mortgage Refinance Calculator
- PITI Calculator (with Taxes & Insurance)
What is a Mortgage?
A mortgage is a loan from a bank or other financial institution that helps a borrower purchase a home. The collateral for the loan is the home itself, meaning if the borrower fails to make payments (defaults), the lender has the right to take possession of the property.
Mortgage payments are typically made monthly and consist of two main parts: principal and interest (P&I). The principal is the amount you borrowed, and the interest is the cost of borrowing that money. Most mortgage payments also include escrow amounts for property taxes and homeowners’ insurance, collectively known as PITI (Principal, Interest, Taxes, and Insurance). This calculator focuses on the P&I portion.
How to Calculate a Mortgage Payment (Example)
Let’s use an example to see how the formula works. Assume you want to buy a $400,000 home with a $80,000 down payment (20%), at a 6% annual interest rate on a 30-year loan.
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Find the Principal (P):
$400,000 (Home Price) – $80,000 (Down Payment) = $320,000 (P)
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Find the Monthly Interest Rate (i):
6% (Annual Rate) / 100 = 0.06
0.06 / 12 (Months) = 0.005 (i) -
Find the Number of Payments (n):
30 (Years) * 12 (Months) = 360 (n)
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Apply the Formula:
M = 320,000 [ 0.005(1 + 0.005)^360 ] / [ (1 + 0.005)^360 – 1 ]
M = 320,000 [ 0.005 * (6.02257) ] / [ 6.02257 – 1 ]
M = 320,000 [ 0.0301128 ] / [ 5.02257 ]
M = 320,000 * 0.0059955
M = $1,918.56 (Estimated Monthly P&I Payment)
Frequently Asked Questions (FAQ)
PITI stands for Principal, Interest, Taxes, and Insurance. While this calculator estimates P&I (Principal & Interest), your total monthly housing payment will almost always include property taxes and homeowners’ insurance, which are often held in an escrow account by your lender.
A fixed-rate mortgage has an interest rate that remains the same for the entire life of the loan. An adjustable-rate mortgage (ARM) has an interest rate that can change periodically after an initial fixed period, causing your monthly payment to increase or decrease.
Amortization is the process of paying off a loan over time with regular, scheduled payments. In the beginning of a mortgage, a larger portion of your payment goes toward interest. As time goes on, more and more of your payment goes toward paying down the principal balance.