How to Calculate Mortgage Payments (Step by Step)
Your monthly mortgage payment is calculated with a fixed formula: M = P × [r(1+r)^n] / [(1+r)^n − 1], where P is your loan amount, r is your monthly interest rate, and n is the total number of monthly payments over the loan term. Every fixed-rate mortgage payment, from every lender, comes from this same formula — the only inputs that change are your numbers.
The mortgage payment formula, explained
Breaking down each part of the formula:
- P (Principal) — the amount you're borrowing, after your down payment.
- r (Monthly rate) — your annual interest rate divided by 12. A 6% annual rate becomes 0.005 as a monthly rate (0.06 ÷ 12).
- n (Number of payments) — your loan term in years, multiplied by 12. A 30-year mortgage is 360 monthly payments.
A worked example
Say you're borrowing $350,000 at a 6% annual rate over 30 years:
- Monthly rate: 6% ÷ 12 = 0.5%, or 0.005
- Number of payments: 30 × 12 = 360
- Plugging into the formula gives a monthly principal-and-interest payment of roughly $2,098.
That number only shifts a small amount for a large change in rate or term, which is why even a 0.5% difference in your interest rate is worth negotiating over — over 360 payments, small percentage differences compound into thousands of dollars.
What this formula doesn't include
The formula above gives you principal and interest only. Your actual monthly bill — often called PITI — usually also includes property taxes, homeowners insurance, and HOA fees if you have them. That's why the calculator below asks for those separately: it's easy to underestimate a mortgage by only calculating principal and interest.
Try it yourself
Enter your own numbers below to see your full monthly payment, including taxes and insurance, plus a complete year-by-year amortization schedule.
Mortgage Calculator
See the full monthly cost of a home — principal, interest, property tax, insurance and HOA — plus how the balance falls year by year.
Your numbers
= $0 down, $0 borrowed
Taxes, insurance & fees (optional)Excluded
Property tax rules differ by country and region. Leave this closed for a pure principal-and-interest figure, or open it and enter your local numbers.
Your figures stay in this browser tab only — nothing is saved or sent anywhere.
Enter your numbers and click Calculate to see your results
Estimates only. Does not include closing costs, PMI, or lender-specific fees. Consult a licensed mortgage professional for an actual quote.
Partner spot
Check today's mortgage rates
Lender comparison offers will sit here so you can see whether refinancing or shopping around is worth it.
Sponsored placements will appear here, clearly labelled.
Payment breakdown & loan balance
Enter your numbers and click Calculate to see your results
Advertisement
About this calculator
A mortgage payment is rarely just the loan. Lenders escrow property taxes and homeowners insurance alongside principal and interest, and if the property sits in an association there is an HOA fee on top. Budgeting from a principal-and-interest quote alone is the most common way buyers end up stretched, which is why this calculator shows the combined number first.
The loan portion itself uses the same amortization mathematics as any instalment loan: interest accrues monthly on the outstanding balance and the remainder of the payment retires principal. Over a thirty-year term that ordering matters enormously. In the first decade the balance barely moves; in the final decade it collapses. The yearly table above quantifies that curve so you can see how much equity you would actually hold if you sold early.
Down payment size does two things at once: it reduces the amount borrowed and, once you pass roughly twenty percent, it typically removes private mortgage insurance. Rate matters too — a single percentage point on a large balance can be worth six figures across the full term. Adjust the rate and down payment sliders together to see which lever moves your situation more.
Lenders typically cap borrowing at a debt-to-income ratio, so paying off other loans can matter as much as a bigger down payment. Points and buydowns trade upfront cash for a lower rate — worth it only if you keep the loan long enough to recoup the cost. And remember that adjustable rates can reset upward after the fixed period ends.
FAQ
What does this mortgage calculator include?
It combines principal and interest with monthly property tax, homeowners insurance and any HOA fee, so the headline figure is closer to what actually leaves your bank account each month than a bare principal-and-interest quote.
Is PMI or mortgage insurance included?
No. Private mortgage insurance, closing costs, points and lender-specific fees are excluded. If your down payment is under 20% you should expect an extra monthly premium on top of the figure shown here.
Why is so much of my early payment interest?
Interest is charged on the outstanding balance, which is at its largest at the start. The yearly amortization table shows how the principal share grows every year while the interest share falls.
What is in the Excel export?
A yearly amortization sheet with principal paid, interest paid and ending balance for each year, plus a summary sheet listing your inputs and the full monthly payment breakdown.