Use this tool to quickly estimate your potential monthly mortgage payment. Understanding this figure is the first and most crucial step in budgeting for a new home purchase.
Monthly Payment Calculator Mortgage
Estimated Monthly Payment:
$0.00Monthly Payment Calculator Mortgage 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 (Loan Term in Years × 12)
Variables Explained
- Loan Principal: The total amount of money borrowed for the mortgage.
- Annual Interest Rate (%): The yearly cost of borrowing the principal, expressed as a percentage.
- Loan Term (Years): The number of years over which the loan will be repaid (e.g., 15 years, 30 years).
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What is a Monthly Mortgage Payment?
A monthly mortgage payment is the fixed sum of money a borrower pays to the lender on a recurring basis, usually on the first day of the month, to pay back the home loan. The payment is structured to cover both the principal (the actual amount borrowed) and the interest (the cost of borrowing the money).
The amortization schedule dictates how the payment is divided. Early in the loan term, the majority of the payment goes toward interest. As the loan matures, a greater portion of the payment is applied to the principal, steadily reducing the outstanding balance until the loan is fully paid off.
How to Calculate Monthly Payment Mortgage (Example)
- Identify the Variables: Assume a Principal (P) of $200,000, an Annual Rate (R) of 6.0%, and a Term (N) of 30 years.
- Calculate Monthly Rate (i): Divide the annual rate by 1200: $i = 6.0 / 1200 = 0.005$.
- Calculate Total Payments (n): Multiply the term by 12: $n = 30 \times 12 = 360$.
- Apply the Formula: Substitute these values into the payment formula to get M: $M = 200,000 \times [ 0.005(1.005)^{360} ] / [ (1.005)^{360} – 1 ]$.
- Solve: The resulting Monthly Payment (M) is approximately $1,199.10.
Frequently Asked Questions (FAQ)
What does PITI stand for in a mortgage payment?
PITI stands for Principal, Interest, Taxes, and Insurance. While this calculator only calculates the Principal and Interest (P&I) portion, a borrower’s total monthly housing payment often includes estimated property taxes (T) and homeowner’s insurance (I).
Does this calculator include property taxes and insurance?
No. This calculator focuses only on the fundamental loan amortization component: Principal and Interest (P&I). You must calculate and add property taxes, insurance premiums, and any HOA fees separately for the true total housing cost.
What is an amortization schedule?
An amortization schedule is a table that details every single payment for the entire life of the loan. It shows exactly how much of each payment goes toward interest and how much goes toward reducing the principal balance.
How much interest will I pay over the life of a 30-year loan?
The total interest paid depends heavily on the principal and rate. Using the $200,000 at 6.0% example, over 30 years, you would pay a total of $431,675.39 ($1,199.10 monthly payment × 360 payments), meaning $231,675.39 in total interest—more than the original principal.