Calculate your estimated monthly mortgage payment quickly and accurately. Understanding this core payment is the first step toward smart homeownership planning.
Monthly Mortgage Calculator
Monthly Mortgage Payment Formula
The standard formula for calculating a fixed monthly loan payment (M) is based on the principal amount, interest rate, and number of payments.
$$ M = P \frac{i (1+i)^n}{(1+i)^n – 1} $$
Where:
- $M$ = Monthly Payment
- $P$ = Principal Loan Amount
- $i$ = Monthly Interest Rate (Annual Rate / 1200)
- $n$ = Total Number of Payments (Loan Term in Years × 12)
Formula Source: Investopedia: Amortized Loan | Khan Academy: Mortgage Calculations
Variables Explained
Here is what each input in the calculator represents:
- Principal Loan Amount: The total amount of money borrowed for the mortgage, typically the purchase price minus the down payment.
- Annual Interest Rate (%): The annual percentage rate charged by the lender on the remaining loan balance.
- Loan Term (Years): The duration of the mortgage loan, usually 15 or 30 years, during which the principal and interest are repaid.
Related Calculators
Explore other financial tools to help with your planning:
- Mortgage Refinance Break-Even Calculator
- Extra Mortgage Payment Savings Calculator
- Debt-to-Income (DTI) Ratio Calculator
- Home Affordability Calculator
What is a Monthly Mortgage Payment?
The monthly mortgage payment is the fixed amount you pay to your lender every month for a specific period (the loan term) to pay back the money you borrowed to buy a house, plus interest. This payment is part of an amortized loan schedule, meaning that in the early years, a larger portion of the payment goes toward interest, and later, more goes toward reducing the principal balance.
It is crucial to note that the result from this calculator only represents the principal and interest (P&I) portion of your payment. Lenders often collect additional amounts for property taxes and homeowner’s insurance (known as escrow), which are bundled with the P&I to form your total monthly housing payment (PITI).
How to Calculate Monthly Mortgage Payment (Example)
Let’s use a sample scenario to demonstrate the calculation:
- Identify Variables: Principal Loan Amount ($200,000), Annual Rate (5.0%), and Term (30 years).
- Calculate Monthly Interest Rate (i): $i = \frac{5.0\%}{12} = \frac{0.05}{12} \approx 0.004167$
- Calculate Total Number of Payments (n): $n = 30 \text{ years} \times 12 \text{ months/year} = 360$ payments.
- Calculate the Compounding Factor: $(1+i)^n = (1.004167)^{360} \approx 4.4677$
- Apply Formula: $M = \$200,000 \times \frac{0.004167 \times 4.4677}{4.4677 – 1}$
- Solve: $M = \$200,000 \times \frac{0.018615}{3.4677} \approx \$1,073.64$
The estimated monthly principal and interest payment for this example is $1,073.64.
Frequently Asked Questions (FAQ)
PITI stands for Principal, Interest, Taxes, and Insurance. While this calculator only computes Principal and Interest (P&I), PITI is the true total amount a homeowner pays each month, which includes P&I plus the escrow amounts for property taxes and homeowner’s insurance.
A shorter loan term (e.g., 15 years vs. 30 years) results in a significantly higher monthly payment because you are repaying the principal in less time. However, a shorter term drastically reduces the total amount of interest paid over the life of the loan.
Yes. Any amount paid over the minimum is usually applied directly to the principal balance, which reduces the amount of interest accrued in the following months. This accelerates the payoff of the loan and saves a substantial amount of money in the long run.
No, this calculator is strictly for the Principal and Interest portion of your loan payment. Taxes and insurance are highly location-dependent and must be calculated separately when determining your overall housing budget.