This calculator and content are verified for financial accuracy and compliance with standard mortgage lending formulas.
The Monthly Mortgage Payment Calculator helps you estimate your future monthly housing expenses based on the principal loan amount, interest rate, and term. This is a crucial step in budgeting and determining your home affordability.
Monthly Mortgage Payment Calculator
Estimated Monthly Payment:
$0.00Monthly Mortgage Payment Formula
M = P [ i(1 + i)^n / ((1 + i)^n - 1) ]
Where:
M = Monthly Payment
P = Principal Loan Amount
i = Monthly Interest Rate (Annual Rate / 1200)
n = Total Number of Payments (Term in Years × 12)
Variables Explained
- Principal Loan Amount: The initial amount of money borrowed from the lender. This is the house price minus your down payment.
- Annual Interest Rate: The yearly cost of borrowing money, expressed as a percentage. This is not the rate applied monthly.
- Loan Term (Years): The number of years over which you will repay the loan. Common terms are 15, 20, or 30 years.
- Monthly Payment: The final result, representing the fixed amount you pay the lender each month, covering both principal and interest.
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What is a Monthly Mortgage Payment?
A monthly mortgage payment (M) is the recurring amount a borrower pays a lender to cover the cost of a home loan. The payment is calculated using a standard amortization formula to ensure that the loan’s principal and interest are fully repaid over the term (e.g., 30 years).
Crucially, your monthly payment consists of two parts: a principal repayment and an interest payment. In the early years of the loan, the majority of your payment goes towards interest. As the loan matures, the interest portion decreases, and the principal repayment portion increases, gradually paying down the loan balance until it reaches zero.
This calculated amount helps homeowners budget accurately, as it typically represents the largest regular expense outside of property taxes and insurance (which are often paid into an escrow account alongside the M payment).
How to Calculate a Monthly Mortgage Payment (Example)
Let’s calculate the monthly payment for a $200,000 loan at a 6% annual rate over 30 years.
- Define Variables:
- Principal (P) = $200,000
- Annual Rate (R) = 6%
- Term (T) = 30 Years
- Convert to Monthly Terms:
- Monthly Rate (i) = 0.06 / 12 = 0.005 (0.5%)
- Total Payments (n) = 30 Years * 12 Months/Year = 360
- Calculate the Interest Factor:
- $(1 + i)^n = (1 + 0.005)^{360} \approx 6.022575$
- Apply the Formula:
- $M = P \left[ \frac{i \times (1+i)^n}{(1+i)^n – 1} \right]$
- $M = \$200,000 \left[ \frac{0.005 \times 6.022575}{6.022575 – 1} \right]$
- $M = \$200,000 \left[ \frac{0.030112875}{5.022575} \right] \approx \$200,000 \times 0.0059955$
- Final Monthly Payment:
- $M \approx \$1,199.10$
Frequently Asked Questions (FAQ)
Is the monthly payment always fixed?
Yes, for a fixed-rate mortgage, the principal and interest portion of your monthly payment is fixed for the life of the loan. Payments only change if your mortgage is adjustable-rate (ARM) or if your escrow payments for taxes and insurance are adjusted by the lender.
Does this calculation include property taxes and insurance?
No, this calculation only provides the principal and interest (P&I) portion of your payment. Taxes and insurance (often referred to as T&I) must be added separately to get your total housing cost (PITI).
What is the maximum loan term I can choose?
The standard maximum term for a conventional mortgage is 30 years, though 15-year terms are also very common. Some specialized loans may offer shorter or longer periods, but 30 years is the most common benchmark.
How does a higher down payment affect the monthly payment?
A higher down payment reduces the Principal Loan Amount (P). Since P is directly proportional to M in the formula, reducing P will directly decrease your required Monthly Payment (M).