Use this comprehensive Mortgage Payment Calculator to quickly determine your monthly obligation, total interest paid, and effective annual costs based on your desired loan amount and term.
Mortgage Payment Calculator: Choose Payment Amount
Detailed Calculation Breakdown
Enter valid inputs and click ‘Calculate’ to see the detailed steps.
Mortgage Payment Formula
The standard formula used to calculate a fixed-rate mortgage payment is based on the annuity formula.
$$M = P \cdot \frac{i(1+i)^n}{(1+i)^n - 1}$$
Where:
- M = Monthly Payment
- P = Principal Loan Amount
- i = Monthly Interest Rate ($r / 12 / 100$)
- n = Total Number of Payments ($t \times 12$)
Formula Source: Federal Reserve Mortgage Glossary | CFPB Tools
Variables Explained
- Loan Principal (P): The total amount of money borrowed from the lender.
- Annual Interest Rate (r): The yearly cost of the loan, expressed as a percentage. This is converted to a monthly rate for calculation.
- Loan Term (t): The number of years over which the loan is scheduled to be repaid (e.g., 15, 30 years).
Related Calculators
- Amortization Schedule Calculator
- Bi-Weekly Payment Savings Calculator
- Refinance Break-Even Calculator
- Rent vs. Buy Analysis Tool
What is “Choosing Your Mortgage Payment Amount”?
The phrase “choosing your mortgage payment amount” refers to the process of reverse-engineering your maximum affordable loan amount based on a target monthly payment you are comfortable with. However, most financial planning starts with calculating the monthly payment (M) from the Principal (P), Rate (r), and Term (t). This calculator performs the standard calculation to show you what payment you are committing to.
Understanding the monthly payment is the most critical factor in household budgeting. It’s essential to not only cover the principal and interest (P&I) shown here but also include taxes, insurance, and HOA fees (the “PITI” total) to fully grasp your financial obligation.
How to Calculate Mortgage Payment (Example)
- Determine Variables: Assume a Principal ($P$) of $200,000, an Annual Rate ($r$) of 6.0%, and a Term ($t$) of 30 years.
- Calculate Monthly Rate ($i$): $i = (6.0 / 100) / 12 = 0.005$.
- Calculate Total Payments ($n$): $n = 30 \text{ years} \times 12 \text{ months/year} = 360 \text{ payments}$.
- Apply the Formula: $M = \$200,000 \cdot \frac{0.005(1+0.005)^{360}}{(1+0.005)^{360} – 1}$.
- The Result: The resulting monthly payment ($M$) is $1,199.10.
Frequently Asked Questions (FAQ)
A longer loan term (e.g., 30 years) results in a lower monthly payment but significantly increases the total interest paid over the life of the loan. A shorter term (e.g., 15 years) has a higher payment but costs less overall.
An amortization schedule is a table showing the breakdown of each monthly payment into principal repayment and interest expense, tracking the remaining loan balance over the entire term.
While 20% is traditionally recommended to avoid Private Mortgage Insurance (PMI), many lenders offer options for down payments as low as 3% to 5%.
Yes. By inputting your target monthly payment and using a reverse calculation, you can estimate the maximum principal amount you can finance, which is the core concept of “choosing your payment amount.”