Use the comprehensive Mortgage Amortization Calculator below to determine your monthly mortgage payment, the total interest you will pay over the life of the loan, and to view a detailed payment schedule.
Mortgage Amortization Calculator
Estimated Monthly Payment (P&I)
Mortgage Amortization Formula
The standard fixed-rate mortgage payment formula is:
$$M = P \frac{i(1+i)^n}{(1+i)^n-1}$$Where:
- M = Monthly Payment
- P = Principal Loan Amount
- i = Monthly Interest Rate (Annual Rate / 12)
- n = Total Number of Payments (Loan Term in Years × 12)
Formula Source: Investopedia | Related Authority: Bankrate
Input Variables Explained
- Loan Principal ($): The total amount of money borrowed from the lender. This is the initial balance of the mortgage.
- Annual Interest Rate (%): The yearly rate charged on the loan balance. The calculator divides this by 12 to find the monthly rate.
- Loan Term (Years): The length of time, in years, over which the loan is scheduled to be repaid (e.g., 15, 20, or 30 years).
Related Financial Calculators
What is Mortgage Amortization?
Mortgage amortization is the process of paying off a home loan with regular, equal payments over a specified period. The amortization schedule details how each monthly payment is divided between paying down the loan’s principal and covering the accrued interest. In the early years of a mortgage, the vast majority of your monthly payment goes toward interest, while only a small portion reduces the principal balance.
As the loan matures, this ratio shifts. Because the principal balance decreases with each payment, less interest accrues, and consequently, a larger portion of your fixed monthly payment is applied to the principal. This is the core concept behind an amortization schedule: showing the exact breakdown of every payment until the loan reaches a zero balance at the end of the term.
How to Calculate Mortgage Payment (Example)
- Determine Monthly Interest Rate (i): If the annual rate (R) is 6%, then $i = 0.06 / 12 = 0.005$.
- Determine Total Payments (n): For a 30-year loan paid monthly, $n = 30 \times 12 = 360$ payments.
- Apply the Formula: Using a principal (P) of $100,000, plug all values into the formula to solve for the Monthly Payment (M).
- Calculate Interest Portion: In month one, the interest portion is $100,000 \times 0.005 = \$500$.
- Calculate Principal Reduction: The principal reduction is $M – \$500$. This new principal balance is used for the next month’s calculation.
Frequently Asked Questions (FAQ)
What is P&I?
P&I stands for Principal and Interest. This is the core amount calculated by this amortization tool. It excludes other costs like property taxes and homeowner’s insurance (often called escrow or PITI).
Why is most of my payment interest early on?
Mortgage interest is calculated on the outstanding principal balance. Since the balance is highest at the beginning of the loan, the interest portion of your fixed monthly payment is also at its peak.
Does the calculator include property taxes or insurance?
No, this calculator only determines the Principal and Interest (P&I) payment. You must manually add your estimated monthly escrow payment (taxes and insurance) to find your total housing payment.
Can I pay off my mortgage early?
Yes, by making extra payments toward the principal. Using the amortization schedule, you can see how even small additional principal payments drastically reduce the total interest paid and shorten the loan term.