Use this calculator to determine your monthly mortgage payment and view a detailed breakdown of the principal and interest paid over the life of your loan.
Mortgage Calculator with Interest and Principal Breakdown
Calculated Monthly Payment (P&I)
| Total Principal Paid: | $0.00 |
| Total Interest Paid: | $0.00 |
| Total Repayment: | $0.00 |
Amortization Schedule (Principal and Interest Breakdown)
| Payment # | Payment Amount | Principal Paid | Interest Paid | Remaining Balance |
|---|
Mortgage Payment Formula:
M = P [ r(1 + r)ⁿ / ((1 + r)ⁿ – 1) ]
Formula Source: Bankrate Mortgage Education
Variables in the Mortgage Formula:
- M: Monthly Payment (Principal and Interest)
- P: Principal Loan Amount (Your input)
- r: Monthly Interest Rate (Annual Rate / 1200)
- n: Total Number of Payments (Loan Term in Years × 12)
Related Financial Calculators:
- Home Affordability Calculator
- Refinance Savings Calculator
- Mortgage Payoff Calculator
- Debt-to-Income Ratio Calculator
What is Principal and Interest Breakdown?
A mortgage payment is generally a fixed amount that covers both the principal and the interest on the loan. The **principal** is the actual amount of money borrowed, and the **interest** is the cost charged by the lender for that money.
The breakdown is crucial because it shows how much of each monthly payment goes towards reducing your debt (principal) versus paying the cost of borrowing (interest). Due to the nature of amortization, early payments are heavily skewed towards interest, while later payments prioritize principal reduction.
How to Calculate a Mortgage Payment (Example):
- Determine Variables: Assume a loan of $200,000 (P) at 5% annual interest (R) over 30 years (N).
- Find Monthly Rate (r) and Term (n): $r = 0.05 / 12 = 0.004167$. $n = 30 \times 12 = 360$ payments.
- Calculate Power: $(1 + r)^{n} = (1.004167)^{360} \approx 4.4677$.
- Solve the Formula: $M = \$200,000 \times [ (0.004167 \times 4.4677) / (4.4677 – 1) ]$.
- Result: The resulting monthly payment is approximately $1,073.64. Of this amount, the first payment will include about $833.33 in interest and $240.31 in principal.
Frequently Asked Questions (FAQ)
Q: Why does the interest portion decrease over time?
A: The interest for a given month is calculated only on the remaining loan principal. Since the principal balance decreases with every payment, the interest portion of the next payment is lower, allowing a larger share of the fixed monthly payment to go toward the principal.
Q: Does this calculator include PITI?
A: No. This calculator only estimates the P&I (Principal and Interest) portion of your payment. It does not include PITI (Principal, Interest, Taxes, and Insurance), which are often escrowed. Always consult a lender for your full PITI payment.
Q: How does a shorter loan term affect the breakdown?
A: A shorter term (e.g., 15 years vs. 30 years) drastically reduces the total interest paid and accelerates principal reduction. While the monthly payment will be higher, the amount of interest paid over the life of the loan is significantly lower.
Q: What is the benefit of viewing the amortization schedule?
A: The amortization schedule provides full transparency, showing exactly how much of your money is paying down the debt versus paying the cost of borrowing. It is essential for planning accelerated payments or understanding long-term equity growth.