Use this **Mortgage Payment Calculator** to quickly estimate your monthly principal and interest payments. Understanding your monthly obligation is the first crucial step in planning your home purchase or refinancing.
Mortgage Payment Calculator
Estimated Monthly Payment (P&I):
$0.00Detailed Calculation Breakdown
Mortgage Payment Calculator Formula
The standard formula used to calculate a fixed monthly mortgage payment (M) is based on the principal, interest rate, and term.
M = P [ i (1 + i)^n ] / [ (1 + i)^n – 1 ]
Formula Source: Bankrate Mortgage Calculation Guide, Investopedia Mortgage Payment
Variables Explained
The calculator uses the following variables to determine your monthly obligation:
- P (Loan Principal): The initial amount of money borrowed for the mortgage.
- R (Annual Interest Rate): The yearly interest rate expressed as a percentage.
- T (Loan Term): The duration of the loan, measured in years.
- i (Monthly Interest Rate): Calculated as the Annual Rate (R) / 12 / 100.
- n (Total Payments): Calculated as the Loan Term (T) * 12.
Related Calculators
You may also find these related financial tools helpful for planning your finances:
- Loan Refinance Savings Calculator
- Home Affordability Estimator
- Amortization Schedule Generator
- Debt-to-Income Ratio Analyzer
What is a Mortgage Payment?
A mortgage payment is the amount of money paid by the borrower to the lender, typically on a monthly basis, to repay the mortgage loan. For a fixed-rate mortgage, this payment is constant throughout the life of the loan and primarily consists of two components: Principal and Interest (P&I).
The Principal portion goes toward reducing the actual amount borrowed, while the Interest portion is the cost of borrowing the money. Early in the loan’s term, the majority of the payment covers interest. As the loan matures, more of the payment is applied toward the principal, a process known as amortization.
It’s important to note that a full monthly housing payment often includes escrowed items like property taxes and homeowner’s insurance (sometimes referred to as PITI: Principal, Interest, Taxes, Insurance). This calculator only focuses on the P&I portion.
How to Calculate a Mortgage Payment (Example)
Let’s calculate the monthly payment for a $200,000 loan at a 5% annual interest rate over 30 years:
- Determine Variables: Principal (P) = $200,000. Annual Rate (R) = 5% (0.05). Term (T) = 30 years.
- Calculate Monthly Interest Rate (i): $i = R / 12 = 0.05 / 12 \approx 0.004167$
- Calculate Total Number of Payments (n): $n = T \times 12 = 30 \times 12 = 360$
- Apply Formula: Plug these values into the amortization formula. The calculated monthly payment (M) would be approximately $1,073.64.
- Result: Over 30 years, the borrower will pay a total of $386,510.40, with $186,510.40 being interest.
Frequently Asked Questions (FAQ)
Is the interest rate in the formula monthly or annual?
The interest rate ($i$) used in the standard mortgage payment formula is the **monthly interest rate**, which is derived by dividing the Annual Percentage Rate (APR) by 12.
What is the difference between Principal and Interest?
Principal is the original amount of money you borrowed. Interest is the cost the lender charges you for borrowing that money. Every payment reduces the principal, but the interest component is larger in the early years.
Does this calculator include property taxes or insurance?
No. This calculator exclusively calculates the Principal and Interest (P&I) portion of your payment. You must manually add your local property tax, home insurance, and potential Private Mortgage Insurance (PMI) to estimate your full monthly housing expense (PITI).
What is an Amortization Schedule?
An Amortization Schedule is a table detailing every single payment made over the life of the loan. It shows exactly how much of each payment goes toward interest and how much goes toward principal, illustrating how the loan balance is gradually reduced to zero.