Use this calculator to quickly estimate your monthly mortgage payments, including principal and interest, based on the loan amount, interest rate, and term length.
Calculate Your Monthly Mortgage Payment
Estimated Monthly Payment
Calculation Steps
Mortgage Payment Formula
Where: M = Monthly Payment, P = Principal Loan Amount, i = Monthly Interest Rate, n = Total number of payments.
Formula Source:
Bankrate,
Investopedia
Variables Explained
The calculation requires three primary variables:
- Principal Loan Amount (P): The initial amount borrowed. This is the purchase price minus any down payment.
- Annual Interest Rate (R): The annual percentage rate charged by the lender. This is converted to a monthly rate (i) for the calculation.
- Loan Term in Years (Y): The duration over which the loan will be repaid, typically 15 or 30 years. This determines the total number of payments (n).
What is a Monthly Mortgage Payment?
A monthly mortgage payment is the amount a borrower pays to a lender each month to repay a home loan. The payment usually consists of two main components: **Principal** and **Interest** (P&I). This calculator focuses only on P&I.
Over the life of a loan, the proportion of the payment allocated to interest decreases, while the proportion allocated to principal increases—this process is called amortization. While the core calculation determines P&I, actual payments often include amounts for property taxes and homeowner’s insurance (known as PITI, Principal, Interest, Tax, and Insurance).
How to Calculate Your Mortgage Payment (Example)
Let’s use an example with $200,000 Principal, a 6.0% Annual Rate, and a 30-Year Term.
- Convert to Monthly Rate ($i$): $6.0\% / 100 / 12 = 0.005$
- Calculate Total Payments ($n$): $30 \text{ Years} \times 12 \text{ Months} = 360$
- Apply Formula: Insert the values into the complex mortgage formula to find M.
- Result: Based on the formula, the monthly payment (P&I) is approximately $1,199.10.
Frequently Asked Questions (FAQ)
- Does this payment include property taxes and insurance (PITI)?
- No. This calculator only computes the Principal and Interest (P&I) portion. Taxes and insurance, if escrowed, must be added separately to determine the full monthly housing payment.
- How does a shorter loan term affect my payment?
- A shorter term (e.g., 15 years vs. 30 years) results in significantly higher monthly payments because you are repaying the principal faster. However, it also results in paying much less total interest over the life of the loan.
- What is amortization?
- Amortization is the process of paying off a debt over time in installments. In a mortgage, early payments are mostly interest, while later payments are mostly principal.
- Will a higher down payment lower my monthly payment?
- Yes. A larger down payment reduces the Principal Loan Amount (P), which directly lowers the required monthly payment (M).
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