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 Mortgage Payments Work

Your monthly mortgage payment stays the same every month for the life of a fixed-rate loan, but what's inside that payment shifts over time. Early on, most of your payment goes toward interest. By year 20 of a 30-year loan, the split flips and most goes toward principal.

The Formula

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

M = Monthly payment (principal + interest only)

P = Loan amount (home price minus your down payment)

r = Monthly interest rate (annual rate divided by 12, then by 100)

n = Total payments (loan term in years times 12)

When to Use This Calculator

Use it when comparing homes at different price points, testing what happens if you put more down, or seeing how a rate change affects your payment. It's also useful for checking whether a 15-year term is affordable vs. a 30-year.

What This Doesn't Include

This calculates principal and interest only. Your actual monthly housing cost will be higher because of property taxes (typically 1-2% of home value per year), homeowner's insurance, and PMI if your down payment is under 20%. On a $300K home, taxes and insurance can add $300-$500/month on top of the P&I number shown here.

What Changes the Payment Most

Interest rate has the biggest impact. On a $240,000 loan, the difference between 6% and 7% is about $160/month, which adds up to $57,600 over 30 years. Loan term is next. A 15-year term roughly doubles your monthly payment but saves you more than half the total interest.

Common Mistakes

Forgetting to subtract the down payment before calculating. The formula uses the loan amount, not the home price.

Comparing rates without checking if they include points. A lower rate with 2 points upfront might cost more than a slightly higher rate with no points.

Not accounting for PMI. If you put less than 20% down on a conventional loan, PMI typically adds 0.5-1% of the loan amount per year to your cost.

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.