Use this simple and accurate mortgage monthly payment calculator to estimate your required payment based on the principal loan amount, annual interest rate, and term length in years.
Mortgage Monthly Payment Calculator
Estimated Monthly Payment:
$0.00Mortgage Monthly Payment Formula
The standard formula used to calculate the fixed monthly payment (M) is based on the present value of an annuity:
Formula Source: Investopedia, Bankrate
Variables Explained
- P (Principal Loan Amount): The initial amount of money borrowed from the lender.
- i (Monthly Interest Rate): The annual interest rate divided by 12 (i.e., Annual Rate / 12).
- n (Total Number of Payments): The total number of monthly payments over the loan term (i.e., Loan Term in Years * 12).
- M (Monthly Payment): The fixed amount paid each month, which covers both principal and interest.
Related Calculators
Explore these other useful financial tools:
- Mortgage Amortization Schedule Calculator
- Loan Prepayment Savings Calculator
- Refinance Break-Even Calculator
- Debt-to-Income Ratio Calculator
What is a Mortgage Monthly Payment?
A mortgage monthly payment is the recurring, fixed amount of money a borrower pays to a lender to repay the principal and interest on a home loan. For a conventional fixed-rate mortgage, this payment remains constant throughout the life of the loan, providing stability for the homeowner’s budget.
The payment is primarily composed of two parts: principal (the amount that reduces the loan balance) and interest (the cost of borrowing the money). Early in the loan term, the interest portion is significantly larger than the principal. As the loan matures, this ratio reverses, with most of the payment going toward the principal in the later years.
How to Calculate Mortgage Monthly Payment (Example)
Let’s calculate the monthly payment for a $200,000 loan at 5% annual interest for 15 years.
- Identify Variables:
- P (Principal) = $200,000
- Annual Rate (R) = 5% or 0.05
- Term (T) = 15 years
- Calculate Monthly Rate (i):
i = R / 12 = 0.05 / 12 = 0.0041667
- Calculate Total Payments (n):
n = T * 12 = 15 * 12 = 180
- Apply the Formula:
M = 200,000 [ 0.0041667(1 + 0.0041667)¹⁸⁰ ] / [ (1 + 0.0041667)¹⁸⁰ – 1 ]
M ≈ $1,581.59
Frequently Asked Questions (FAQ)
How does the interest rate affect my monthly payment?
A higher annual interest rate results in a significantly higher monthly payment because the cost of borrowing increases. Even small changes in the rate can impact the total interest paid over the long term.
Should I pay bi-weekly instead of monthly?
Paying bi-weekly (half the monthly payment every two weeks) results in 26 half-payments, which equals 13 full monthly payments per year. This accelerates the principal repayment, saving you substantial interest and shortening your loan term.
What is an amortization schedule?
An amortization schedule is a table detailing each periodic loan payment, showing how much is applied to interest and how much to the principal balance. It illustrates how the loan balance decreases over time.
Do mortgage payments include property taxes and insurance?
They often do. While the core payment covers principal and interest (P&I), many lenders require you to pay property taxes and homeowners insurance (T&I) into an escrow account, making the full monthly payment PITI (Principal, Interest, Taxes, Insurance).