Expert Reviewed & Verified: This calculator and its methodology have been reviewed by David Chen, CFA, a certified financial analyst with 15 years of experience in real estate finance.
Use this comprehensive **Mortgage Calculator** to quickly estimate your monthly loan payments, total interest paid, and the full amortization schedule. Simply input the principal amount, annual interest rate, and the loan term in years.
Mortgage Payment Calculator
Mortgage Payment Formula
Where:
- M = Monthly Payment
- P = Principal Loan Amount
- r = Monthly Interest Rate (Annual Rate / 12 / 100)
- n = Total Number of Payments (Loan Term in Years × 12)
Formula Sources: Investopedia – Mortgage Calculation, The Balance – Loan Payments
Variables Explained
The Mortgage Calculator requires three key variables:
- Principal Loan Amount: The initial amount borrowed. This is the house price minus your down payment.
- Annual Interest Rate (%): The yearly percentage rate charged by the lender. The calculator converts this to a monthly rate (r).
- Loan Term (Years): The number of years you have to repay the loan. This is converted to the total number of payments (n).
Related Calculators
Explore these related financial tools:
- Debt-to-Income Ratio Calculator
- Extra Payment Mortgage Savings Calculator
- Amortization Schedule Generator
- Home Affordability Calculator
What is a Mortgage Calculator?
A mortgage calculator is an essential financial tool that helps prospective and current homeowners estimate the cost of borrowing money to purchase a property. It uses key inputs—the loan amount, interest rate, and repayment term—to determine the regular monthly payment required to fully pay off the loan and all accrued interest over the specified period.
Understanding the monthly payment (Principal and Interest) is the first and most critical step in budgeting for a home purchase. It helps buyers set realistic expectations for what they can afford and allows them to compare different loan scenarios (e.g., 15-year vs. 30-year terms, or varying interest rates).
How to Calculate Monthly Mortgage Payment (Example)
- Determine Inputs: Start with Principal ($200,000), Annual Rate (6.5%), and Term (30 years).
- Calculate Monthly Rate (r): Divide the annual rate by 12 and 100: $r = 6.5 / 12 / 100 = 0.00541667$.
- Calculate Total Payments (n): Multiply the term by 12: $n = 30 \times 12 = 360$.
- Apply the Formula: Substitute P, r, and n into the formula: $$ M = 200,000 \frac{0.00541667(1+0.00541667)^{360}}{(1+0.00541667)^{360} – 1} $$
- Solve for M: The resulting monthly payment (P&I only) is approximately $1,264.14$.
Frequently Asked Questions (FAQ)
How does the loan term affect my monthly payment?
A shorter loan term (e.g., 15 years) results in a significantly higher monthly payment because you are paying off the principal amount faster. However, a shorter term drastically reduces the total amount of interest paid over the life of the loan.
Does this calculation include property taxes and insurance?
No. This calculator determines the Principal and Interest (P&I) portion only. A full monthly housing payment, often referred to as PITI (Principal, Interest, Taxes, and Insurance), would require adding those elements separately.
What is amortization?
Amortization is the process of paying off debt over time in regular installments. Early payments primarily cover interest, while later payments focus more heavily on reducing the principal balance.
Can I calculate a 15-year fixed mortgage?
Yes. Simply enter ’15’ in the “Loan Term (Years)” field and click calculate. The tool works for any standard loan term.