Use this comprehensive Mortgage Payment Calculator to quickly estimate your monthly payment, determine the maximum loan amount you can afford, or understand how changing the interest rate or term affects your total cost.
Mortgage Payment Calculator
Calculated Result
Detailed Calculation Steps
Mortgage Payment Formula
The standard formula to calculate the monthly mortgage payment (M) is:
M = P [ i * (1 + i)^n / ( (1 + i)^n - 1 ) ]
Where:
P = Principal Loan Amount i = Monthly Interest Rate (Annual Rate / 1200) n = Total Number of Payments (Loan Term in Years * 12)
Variables Explained
- Loan Principal Amount (P): The initial amount of money borrowed.
- Annual Interest Rate (R): The yearly percentage rate charged by the lender. Entered as a percentage (e.g., 6.5).
- Loan Term (T) in Years: The duration over which the loan is scheduled to be repaid.
- Monthly Payment (M): The fixed amount paid every month (used when solving for P, R, or T).
Related Calculators
- Amortization Schedule Calculator
- Refinance Savings Calculator
- Home Equity Loan Payment Estimator
- Rent vs. Buy Calculator
What is a Mortgage Payment Calculator?
A mortgage payment calculator is a critical financial tool that estimates the required monthly payment for a home loan. It takes into account the principal loan amount, the annual interest rate, and the loan term (in years). The core function is to project the fixed payment necessary to fully amortize the loan—meaning the principal and interest are completely paid off—by the end of the term.
Understanding your estimated monthly payment is the first and most crucial step in budgeting for a home purchase. It helps potential homeowners determine what they can truly afford, preventing them from taking on debt that is too large for their monthly cash flow.
How to Calculate a Monthly Payment (Example)
- Define Variables: Assume a loan of $300,000 (P), an Annual Rate of 6% (R), and a 30-year term (T).
- Calculate Monthly Rate (i): Divide the annual rate by 12 and then by 100: \(i = 0.06 / 12 = 0.005\).
- Calculate Total Payments (n): Multiply the term by 12: \(n = 30 \times 12 = 360\).
- Plug into Formula: Substitute these values into the payment formula: \(M = 300,000 \times [ 0.005 \times (1 + 0.005)^{360} / ( (1 + 0.005)^{360} – 1 ) ]\).
- Solve: The resulting monthly payment (M) would be approximately $1,798.65.
Frequently Asked Questions (FAQ)
What does ‘principal’ mean in a mortgage?
The principal is the original amount of money you borrowed. Your monthly payment covers both the interest charged and a portion of the principal. As you pay down the loan, the principal balance decreases.
How does the loan term affect my payment?
A shorter loan term (e.g., 15 years) results in a higher monthly payment because you have fewer months to pay off the principal. However, a shorter term drastically reduces the total interest paid over the life of the loan.
What is an Amortization Schedule?
An amortization schedule is a table showing every single payment for the life of the loan, detailing how much of each payment goes toward the interest and how much goes toward reducing the principal balance.
Is PITI the same as the monthly payment?
No. PITI stands for Principal, Interest, Taxes, and Insurance. The calculator only calculates the Principal and Interest (P&I) portion. The final payment you make to the lender typically includes property taxes and homeowners insurance (TI).