This calculator is maintained and verified by certified financial professionals for accuracy.
Use this comprehensive tool to accurately estimate your monthly mortgage payments, including principal and interest, before you commit to a loan.
Calculate Mortgage Payment Calculator
calculate mortgage payment calculator Formula
M = P [ i(1 + i)^n / ((1 + i)^n - 1) ]
Where: M = Monthly Payment, P = Principal Loan Amount, i = Monthly Interest Rate, n = Total Number of Payments.
Variables Explanation
- Loan Principal Amount (P): The initial amount of money borrowed.
- Annual Interest Rate (%): The yearly cost of borrowing funds, expressed as a percentage.
- Loan Term (Years): The number of years over which the loan will be repaid.
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What is a Mortgage Payment?
A mortgage payment is the monthly sum a homeowner pays to a lender. The payment typically consists of two main components: Principal and Interest (P&I). The principal portion reduces the loan balance, while the interest is the cost of borrowing the money.
In addition to P&I, some mortgage payments include escrows for property taxes and homeowner’s insurance (often referred to as PITI). This calculator focuses on the Principal and Interest component, as taxes and insurance are highly variable by location and property.
How to Calculate Mortgage Payment (Example)
- Determine Variables: Start with a $200,000 principal (P), a 6% annual rate (R), and a 30-year term (Y).
- Calculate Monthly Rate (i): Divide the annual rate by 12 and convert to a decimal: $6\% / 12 = 0.5\%$. $0.5 / 100 = 0.005$.
- Calculate Total Payments (n): Multiply the term by 12: $30 \text{ years} \times 12 = 360$ payments.
- Solve the Formula: Substitute the values into the formula $M = 200,000 [ 0.005(1 + 0.005)^{360} / ((1 + 0.005)^{360} – 1) ]$.
- Result: The resulting monthly payment (M) is approximately $1,199.10$.
Frequently Asked Questions (FAQ)
What does P&I stand for?
P&I stands for Principal and Interest. This is the core portion of your mortgage payment that directly services the debt.
Is PMI included in this calculation?
No, Private Mortgage Insurance (PMI) is not included. PMI is typically required if your down payment is less than 20% of the home’s purchase price and is calculated separately.
How much interest will I pay over the life of the loan?
The total interest paid can be found by multiplying your monthly payment (M) by the total number of payments (n) and subtracting the original principal (P). For a long-term loan like 30 years, the total interest often exceeds the principal.
What is an amortization schedule?
An amortization schedule is a table that details every single payment for the entire loan term, showing how much goes toward interest and how much goes toward principal for each payment.