Online Mortgage Calculator

How Mortgage Payments Are Calculated

Your monthly mortgage payment is determined by three factors: the loan amount (principal), the interest rate, and the loan term. The standard formula is called amortization, and it ensures you make equal monthly payments for the life of the loan while gradually shifting the balance from interest to principal over time.

The Mortgage Formula

Monthly Payment (M) = P × [r(1+r)ⁿ] / [(1+r)ⁿ − 1]

• P = Loan principal (home price minus down payment)
• r = Monthly interest rate (annual rate ÷ 12)
• n = Total number of payments (years × 12)

This formula keeps your payment fixed but changes the interest-to-principal split every month. In year one, most of each payment is interest. By year 25, most is principal.

How to Use This Calculator

1. Enter the home price and your down payment amount or percentage
2. Enter the annual interest rate (check current 30-year rates)
3. Select the loan term (30, 20, or 15 years are most common)
4. Add property taxes, homeowner's insurance, and PMI if applicable
5. Click Calculate to see your full monthly payment breakdown

Example: $350,000 Home Purchase

Home price: $350,000 | Down payment: $70,000 (20%) | Loan: $280,000

At 6.8% for 30 years: monthly payment ≈ $1,829 (principal + interest only)

At 6.8% for 15 years: monthly payment ≈ $2,490 but total interest paid drops from ~$378,000 to ~$168,000

What's Not Included in PITI

Lenders often collect PITI — Principal, Interest, Taxes, and Insurance — as one monthly payment held in escrow. HOA fees, maintenance, and utilities are separate. Your true monthly housing cost is often 15–25% higher than the P&I payment this calculator shows.