🏠 Finance · Mortgage

How to Calculate
Mortgage Payments

Understand the amortization formula, use our free calculator, and see real examples with full breakdowns.

The Mortgage Payment Formula

Monthly mortgage payment (principal + interest):

M = P × [r(1+r)ⁿ] / [(1+r)ⁿ – 1]
M = monthly payment
P = principal loan amount
r = monthly interest rate (annual ÷ 12)
n = total number of payments (years × 12)
💡 Quick tip: A 6% annual rate = 0.06 ÷ 12 = 0.005 monthly rate. A 30-year loan = 360 monthly payments.

Mortgage Payment Calculator

Monthly Payment
$0
Principal + Interest
Loan Amount
$0
Total Interest
$0
Total Cost
$0
Down Payment
0%

Step-by-Step Guide

1

Find your loan amount (P)

Subtract your down payment from the home price. Example: $300,000 – $60,000 = $240,000 loan.

2

Convert annual rate to monthly (r)

Divide the annual interest rate by 12. Example: 6.5% ÷ 12 = 0.5417% = 0.005417 per month.

3

Calculate total payments (n)

Multiply the loan term in years by 12. Example: 30 years × 12 = 360 monthly payments.

4

Apply the formula

M = 240,000 × [0.005417 × (1.005417)³⁶⁰] / [(1.005417)³⁶⁰ – 1] ≈ $1,517/month

Worked Examples

Starter Home

Price: $200,000
Down: $40,000
Rate: 6%, 30yr
$959/month

Average Home

Price: $350,000
Down: $70,000
Rate: 6.5%, 30yr
$1,769/month

15-Year Term

Price: $300,000
Down: $60,000
Rate: 6%, 15yr
$2,025/month

Low Rate

Price: $250,000
Down: $50,000
Rate: 4%, 30yr
$955/month

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Frequently Asked Questions

What is the formula for mortgage payments? ▾
M = P × [r(1+r)ⁿ] / [(1+r)ⁿ – 1]. P is your loan amount, r is the monthly interest rate (annual rate ÷ 12), and n is total monthly payments (years × 12).
How much house can I afford? ▾
A common rule is that your monthly mortgage should not exceed 28% of your gross monthly income. So if you earn $6,000/month, aim for payments under $1,680.
Does a larger down payment reduce monthly payments? ▾
Yes — a larger down payment reduces the principal (P), which directly lowers your monthly payment and total interest paid over the life of the loan.
What's the difference between a 15-year and 30-year mortgage? ▾
A 15-year mortgage has higher monthly payments but you pay significantly less total interest. A 30-year mortgage has lower monthly payments but costs more overall due to more interest payments.
Does the mortgage payment include property taxes and insurance? ▾
Our calculator shows principal and interest only. Many lenders bundle property taxes and homeowner's insurance into an escrow payment (PITI), which increases your total monthly payment.