How is a mortgage payment calculated?

A mortgage payment is calculated using the amortization formula: M = P * [r(1+r)^n] / [(1+r)^n - 1], where P is the loan principal, r is the monthly interest rate, and n is the total number of payments.

What is included in a mortgage payment?

A basic mortgage payment includes principal and interest (P&I). Your total housing payment may also include property taxes, homeowner's insurance, and PMI (private mortgage insurance) if your down payment is less than 20%.

How much should my down payment be?

A traditional down payment is 20% of the home price, which avoids PMI. However, many loan programs allow as little as 3-5% down. A larger down payment means lower monthly payments and less interest over the life of the loan.

What is the difference between a 15-year and 30-year mortgage?

A 15-year mortgage has higher monthly payments but you pay roughly half the total interest of a 30-year loan. A 30-year mortgage offers lower monthly payments and more cash flow flexibility, but you build equity slower and pay significantly more interest overall.

Free Mortgage Calculator

Calculate your monthly mortgage payment, total interest, and amortization schedule. Enter your home price, down payment, interest rate, and loan term.

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Home Price

USD

Down Payment

USD

Interest Rate

Loan Term

Monthly Payment

$1,516.96

Total Amount Paid$546,106.77

Total Interest Paid$306,106.77

Principal

Total Interest

Monthly Payment vs Interest Rate

View formula & how it works →

How to Calculate Your Mortgage Payment

The mortgage payment formula calculates your monthly principal and interest payment based on the loan amount, interest rate, and loan term.

Formula

M = P * [r(1+r)^n] / [(1+r)^n - 1]

Where:

M = Monthly payment

P = Principal (home price minus down payment)

r = Monthly interest rate (annual rate / 12 / 100)

n = Total number of payments (years * 12)

How It Works

1. Calculate your loan principal by subtracting the down payment from the home price 2. Convert the annual interest rate to a monthly rate 3. Determine the total number of monthly payments 4. Apply the amortization formula to find the fixed monthly payment

Example Calculation

You want to buy a $300,000 home with a $60,000 down payment (20%) at a 6.5% annual interest rate for a 30-year fixed mortgage.

01Calculate the loan principal: $300,000 - $60,000 = $240,000
02Convert annual rate to monthly: 6.5% / 12 = 0.5417% (0.005417)
03Calculate total payments: 30 * 12 = 360 monthly payments
04Apply the formula: M = $240,000 * [0.005417 * (1.005417)^360] / [(1.005417)^360 - 1]
05Monthly Payment = $1,517.09
06Total amount paid over 30 years: $1,517.09 * 360 = $546,152.40
07Total interest paid: $546,152.40 - $240,000 = $306,152.40

Example Calculations

What is the monthly payment on a $300,000 mortgage?

$1,517.09/month

1.Loan amount: $300,000 − $60,000 down = $240,000
2.Interest rate: 6.5% annual → 0.5417% monthly
3.Term: 30 years → 360 payments
4.Monthly payment: M = 240,000 × [0.005417(1.005417)³⁶⁰] / [(1.005417)³⁶⁰ − 1] = $1,517.09

What is the monthly payment on a $500,000 mortgage?

$2,528.48/month

1.Loan amount: $500,000 − $100,000 down = $400,000
2.Interest rate: 6.5% annual → 0.5417% monthly
3.Term: 30 years → 360 payments
4.Monthly payment: M = 400,000 × [0.005417(1.005417)³⁶⁰] / [(1.005417)³⁶⁰ − 1] = $2,528.48

What is the monthly payment on a $200,000 mortgage?

$1,264.14/month

1.Loan amount: $200,000 − $40,000 down = $160,000
2.Interest rate: 6.5% annual → 0.5417% monthly
3.Term: 30 years → 360 payments
4.Monthly payment: M = 160,000 × [0.005417(1.005417)³⁶⁰] / [(1.005417)³⁶⁰ − 1] = $1,264.14

How much is a 15-year mortgage on $300,000?

$2,098.43/month

1.Loan amount: $300,000 − $60,000 down = $240,000
2.Interest rate: 5.75% annual → 0.4792% monthly
3.Term: 15 years → 180 payments
4.Monthly payment: M = 240,000 × [0.004792(1.004792)¹⁸⁰] / [(1.004792)¹⁸⁰ − 1] = $2,098.43

What is the monthly payment on a $400,000 mortgage at 7%?

$2,131.64/month

1.Loan amount: $400,000 − $80,000 down = $320,000
2.Interest rate: 7.0% annual → 0.5833% monthly
3.Term: 30 years → 360 payments
4.Monthly payment: M = 320,000 × [0.005833(1.005833)³⁶⁰] / [(1.005833)³⁶⁰ − 1] = $2,131.64

What is the total interest on a $300,000, 30-year mortgage?

$306,152.40 in total interest

1.Monthly payment: $1,517.09
2.Total payments: $1,517.09 × 360 = $546,152.40
3.Total interest: $546,152.40 − $240,000 = $306,152.40
4.You pay more in interest than the original loan amount over 30 years

Frequently Asked Questions

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How to Calculate Mortgage Payments

Learn how to calculate mortgage payments step by step. Understand the mortgage payment formula, principal vs. interest breakdown, escrow, PMI, and how to use amortization schedules.