Bankrate Mortgage Loan Calculator

Reviewed by David Chen, CFA
Mortgage and Financial Modeling Expert

Use this bankrate mortgage loan calculator to quickly estimate your monthly principal and interest payments. Understanding your monthly obligations is the first critical step in financial planning for homeownership.

Mortgage Loan Payment Calculator

Estimated Monthly Payment (P&I):

Calculation Details

Mortgage Loan Payment Formula

$$M = P \frac{i(1 + i)^n}{(1 + i)^n – 1}$$

Where:

• M = Monthly Payment
• P = Principal Loan Amount
• i = Monthly Interest Rate (Annual Rate / 12)
• n = Total Number of Payments (Loan Term in Years × 12)

Formula Source: Investopedia: How to Calculate Your Mortgage Payment

Variables in the Calculator

• Principal Loan Amount: The initial amount borrowed from the lender, excluding any down payment.
• Annual Interest Rate (%): The yearly percentage rate charged by the lender for the loan. This is divided by 12 to find the monthly rate.
• Loan Term (Years): The number of years you have to repay the loan (e.g., 15 years, 30 years).

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What is a Mortgage Loan Payment Calculator?

A mortgage loan payment calculator is a critical tool for prospective and current homeowners. It uses the loan’s principal, annual interest rate, and term to determine the estimated monthly payment for principal and interest (P&I). This calculation allows users to budget effectively and understand the long-term cost implications of different loan scenarios before committing to financing.

While the calculator provides the P&I portion, remember that the total out-of-pocket monthly expense, often called PITI, also includes property taxes, homeowner’s insurance, and sometimes private mortgage insurance (PMI). This tool focuses on the core debt servicing component, which is mathematically the most complex part to estimate manually.

How to Calculate Monthly Payment (Example)

1. Define Variables: Assume a Principal (P) of $300,000, an Annual Rate (r) of 5.0%, and a Term (T) of 30 years.
2. Calculate Monthly Rate (i): Divide the annual rate by 12 and 100: $i = 0.05 / 12 = 0.004167$.
3. Calculate Total Payments (n): Multiply the term by 12: $n = 30 \times 12 = 360$.
4. Apply Formula Components: Calculate $(1 + i)^n$. For this example, $(1.004167)^{360} \approx 4.4677$.
5. Solve for M: Substitute all values into the formula to find the Monthly Payment (M). In this case, M is approximately $1,610.46.

Frequently Asked Questions (FAQ)

What does the monthly payment calculation include?
The calculated payment includes only the principal (the amount you borrowed) and the interest (the cost of borrowing). It excludes property taxes, homeowner’s insurance, and any necessary Private Mortgage Insurance (PMI), which are often escrowed by the lender.

Why does the payment stay the same but the principal decreases slowly?
This is due to amortization. Early in the loan term, most of your payment goes toward interest, as the principal balance is highest. Over time, a larger portion of your fixed payment is applied to the principal, accelerating the payoff.

Can I calculate an accelerated bi-weekly payment?
This calculator provides the standard monthly payment. For a bi-weekly schedule, you would effectively make one extra monthly payment per year, which significantly reduces the total interest paid and shortens the loan term.

What is a good mortgage rate?
A “good” rate is highly dependent on current market conditions, your credit score, and the specific type of loan you choose (e.g., FHA, Conventional). Always compare offers from multiple lenders to secure the lowest possible Annual Percentage Rate (APR).