Reviewed and Verified by: David Chen, CFA
Use our **Mortgage Payment Calculator** to quickly estimate your monthly principal and interest payments, total interest paid, and total loan cost based on your loan amount, interest rate, and term.
Mortgage Payment Calculator
Total Interest Paid:
Total Loan Cost:
Detailed Amortization Calculation Steps
Mortgage Payment Calculator Formula
The standard formula used by this **calculator mortgage payment** tool to determine the equal monthly payment (M) is:
$$M = P \left[ \frac{i (1+i)^n}{(1+i)^n – 1} \right]$$
Formula Source: Investopedia: Mortgage Payment Calculation Explained, Bankrate: How to Calculate
Variables Used
The following inputs are required for the **calculator mortgage payment**:
- Loan Principal (P): The initial amount borrowed from the lender.
- Annual Interest Rate (%): The yearly rate charged on the loan (not the monthly rate).
- Loan Term (Years): The total duration over which the loan will be repaid.
- Monthly Interest Rate (i): The annual rate divided by 12 and 100 ($i = R / 1200$).
- Total Payments (n): The loan term in years multiplied by 12 ($n = \text{Years} \times 12$).
Related Calculators
What is a Mortgage Payment Calculator?
A **calculator mortgage payment** is a financial tool that estimates the cost of a mortgage loan. It takes into account the three main variables: the principal loan amount, the annual interest rate, and the term of the loan (in years). The primary output is the fixed monthly payment amount required to fully amortize the loan by the end of its term.
The calculation is based on an amortization schedule, meaning each monthly payment is composed of a portion that pays down the principal balance and a portion that covers the interest accrued since the last payment. Early in the loan, a larger share of the payment goes toward interest, and later, a larger share goes toward the principal.
Using this calculator is essential for budgeting, as it provides a clear picture of your long-term financial commitment before you commit to purchasing a home.
How to Calculate Mortgage Payment (Example)
Let’s use an example to illustrate how the monthly payment is determined:
- Identify Variables: Assume a Principal (P) of $200,000, an Annual Rate (R) of 6%, and a Term (T) of 30 years.
- Calculate Monthly Rate (i): Convert the annual percentage to a monthly decimal: $i = 0.06 / 12 = 0.005$.
- Calculate Total Payments (n): Convert the term to months: $n = 30 \times 12 = 360$ payments.
- Apply the Formula: Substitute the values into the formula: $M = 200,000 \left[ \frac{0.005 (1+0.005)^{360}}{(1+0.005)^{360} – 1} \right]$.
- Solve for M: After computation, the monthly payment (M) would be approximately $1,199.10.
Frequently Asked Questions (FAQ)
What does the monthly payment calculation include?
The basic calculation includes only the Principal and Interest (P&I). It typically excludes Escrow payments for Property Taxes and Homeowner’s Insurance (sometimes called PITI).
How does the loan term affect my payment?
A shorter loan term (e.g., 15 years) results in a higher monthly payment but significantly less total interest paid over the life of the loan compared to a longer term (e.g., 30 years).
Can I use this calculator for variable-rate mortgages?
This calculator is designed for Fixed-Rate Mortgages, where the interest rate remains constant. While it can give an estimate for the initial period of an Adjustable-Rate Mortgage (ARM), the payment will change when the rate adjusts.
What is an Amortization Schedule?
It is a table detailing each periodic payment on a loan, showing the amount of principal and the amount of interest that comprise each payment until the loan is paid off at the end of its term.