Mortgage Payment Calculator – Monthly Payment Estimator
Calculate your monthly mortgage payment including principal and interest. See how much house you can afford based on your budget. Free financial tool.
How Monthly Mortgage Payments Are Calculated
The standard monthly mortgage payment formula for a fixed-rate loan:
M = P × [r(1+r)ⁿ] / [(1+r)ⁿ − 1]
Where:
- M = monthly payment
- P = principal loan amount
- r = monthly interest rate (annual rate ÷ 12)
- n = total number of payments (loan term in years × 12)
Example: $300,000 loan at 7% annual rate, 30-year term:
r = 7% ÷ 12 = 0.5833% per month
n = 30 × 12 = 360 payments
M = $300,000 × [0.005833 × (1.005833)³⁶⁰] ÷ [(1.005833)³⁶⁰ − 1] = $1,996/month
Over 30 years, total paid: $1,996 × 360 = $718,560 — more than double the original $300,000 loan.
Amortization: How Payments Split Between Principal and Interest
Each payment is split between interest and principal reduction. Early payments are mostly interest; later payments are mostly principal — this is called amortization.
Example for the $300,000 @ 7% loan above:
| Payment # | Payment | Interest portion | Principal portion | Remaining balance |
|---|---|---|---|---|
| 1 | $1,996 | $1,750 | $246 | $299,754 |
| 12 | $1,996 | $1,737 | $259 | $296,817 |
| 60 | $1,996 | $1,688 | $308 | $288,668 |
| 180 | $1,996 | $1,505 | $491 | $257,263 |
| 360 | $1,996 | $12 | $1,984 | $0 |
After 5 years (60 payments) on this loan, you've paid $119,760 total but only reduced the principal by $11,332 — the remaining $108,428 was interest.
How Extra Principal Payments Affect Your Mortgage
Making extra payments toward principal dramatically reduces total interest paid and loan duration:
| Extra monthly payment | Years saved | Interest saved |
|---|---|---|
| $0 (baseline) | — | — |
| $100/month | 3.2 years | ~$44,000 |
| $200/month | 5.5 years | ~$73,000 |
| $500/month | 10.1 years | ~$131,000 |
The earliest extra payments have the highest impact because they reduce the principal on which all future interest is calculated. Paying one extra mortgage payment per year (split into 12 monthly increments of ~$166 for our example) saves years off a 30-year mortgage.
Fixed-Rate vs Adjustable-Rate Mortgages
Two main mortgage types:
- Fixed-rate mortgage (FRM): Interest rate stays the same for the entire loan term. Predictable payments; no payment shock risk. Best when rates are low or you plan to stay in the home long-term.
- Adjustable-rate mortgage (ARM): Rate is fixed for an initial period (3, 5, 7, or 10 years), then adjusts annually based on an index (SOFR or CMT). A 5/1 ARM: fixed for 5 years, adjusts annually after. ARMs often start lower than fixed rates. Best when you plan to sell or refinance before the adjustment period.
ARM caps limit how much rates can change: typical caps are 2% per adjustment period, 5–6% lifetime. A 5/1 ARM starting at 5% with a 5% lifetime cap maxes out at 10%.
Frequently Asked Questions
What is included in a monthly mortgage payment (PITI)?
A full mortgage payment often includes: Principal (loan balance reduction), Interest (cost of borrowing), Taxes (property taxes, collected by lender and paid to your escrow account), and Insurance (homeowner's insurance, plus PMI if down payment < 20%). This is known as PITI. The base principal + interest is what this calculator computes; taxes and insurance are on top.
What is PMI and when can I remove it?
Private Mortgage Insurance (PMI) is required when your down payment is less than 20%. It typically costs 0.5–1.5% of the loan amount annually. Once your loan-to-value (LTV) ratio reaches 80% (either through payments or appreciation), you can request PMI cancellation. It's automatically canceled when LTV reaches 78% under federal law (Homeowners Protection Act).
How does credit score affect my mortgage rate?
Credit score is one of the most significant factors in your mortgage rate. Borrowers with scores above 760 typically receive the best rates. Compared to a 760+ borrower, a 680 score might pay 0.5–1.0% more in interest rate, which on a $300,000 30-year mortgage adds $100–$200/month and $36,000–$72,000 in total interest.
What is the difference between a 15-year and 30-year mortgage?
A 15-year mortgage has higher monthly payments but a lower interest rate and dramatically less total interest paid. Example at $300,000: 30-year at 7% = $1,996/month, $418,527 total interest. 15-year at 6.5% = $2,614/month, $170,529 total interest — saving $247,998 in interest at the cost of $618 more per month.
How Mortgage Payments Are Calculated
Monthly mortgage payments use the amortization formula: M = P × [r(1+r)^n] / [(1+r)^n − 1], where P = principal, r = monthly rate (annual rate ÷ 12), and n = total payments. This creates a fixed monthly payment where the proportion going to interest vs. principal shifts over time.
| Loan Amount | Rate (30-yr fixed) | Monthly Payment | Total Interest Paid |
|---|---|---|---|
| ,000 | 6.5% | ,264 | ,000 |
| ,000 | 6.5% | ,896 | ,000 |
| ,000 | 6.5% | ,528 | ,000 |
| ,000 | 7.0% | ,327 | ,000 |
In early amortization, most of your payment goes to interest. On a 30-year ,000 mortgage at 6.5%, your first payment of ,896 breaks down as: ~,625 interest, principal. By year 25, the split reverses. Making extra principal payments early dramatically reduces total interest: one extra payment per year on a 30-year mortgage reduces the term by approximately 5 years.
What is the difference between a 15-year and 30-year mortgage?
A 15-year mortgage has higher monthly payments (~40–50% more) but roughly half the total interest cost. A ,000 loan at 6.5%: 30-year = ,896/mo, K total interest; 15-year = ,613/mo, K total interest — saving K.
What does PITI mean in mortgage payments?
PITI = Principal, Interest, Taxes, Insurance. Lenders calculate affordability using total PITI, not just principal and interest. Property taxes and homeowner's insurance add –/month to typical payments.
How does a 1% difference in rate affect my payment?
On a ,000 30-year loan, 1% higher rate adds ~/month and over ,000 in total interest. Rate shopping is worth the effort.