Mortgage Payment Calculator

Mortgage payment calculator at a glance#

A mortgage payment calculator works out your fixed monthly payment from the loan amount, the annual interest rate and the number of years. The standard formula is M = P x [r(1 + r)^n] / [(1 + r)^n - 1], where P is the loan amount, r is the annual rate divided by 12, and n is the number of monthly payments. This covers principal and interest only.

For a $250,000 loan at 7% over 30 years, the monthly payment is $1,663.26. Of that first payment, about $1,458.33 goes to interest and $204.92 to principal; the principal share grows every month as the balance falls. Taxes, homeowners insurance and any mortgage insurance are added on top of this principal and interest figure.

These figures are 30-year fixed principal and interest, rounded to the nearest dollar. Each step up in rate raises the payment, which is why the rate matters as much as the loan size. To find the payment on your own loan, enter the home price, down payment, rate and loan term in the calculator above for the exact principal and interest, plus estimated taxes and insurance. Your real bill can differ with PMI, escrow and local tax rates.

The four parts of a mortgage payment (PITI)#

A full mortgage payment has four parts, often shortened to PITI: principal, interest, taxes, and insurance. Principal and interest are set by the loan amount, rate, and term and stay fixed on a fixed-rate loan. Taxes and insurance are collected monthly into an escrow account, then paid out yearly on your behalf. If your down payment is under 20%, mortgage insurance is added as a fifth line. The answer block above gives the principal and interest; this section shows the rest.

A worked PITI example#

Take a $300,000 home with 10% down, so a $270,000 loan at 6.5% over 30 years. The principal and interest come to $1,706.58 a month. Add property taxes at 1.1% of the home value, which is $275.00 a month, and homeowners insurance at $1,200 a year, which is $100.00 a month. Because the down payment is under 20%, mortgage insurance at 0.5% of the loan adds $112.50 a month. The full payment is $1,706.58 + $275.00 + $100.00 + $112.50, or $2,194.08. The principal and interest are under 78% of the bill, so leaving out taxes and insurance understates your true cost by a wide margin.

How the principal and interest split shifts#

Each payment covers the interest that accrued on the current balance first; the rest reduces the principal. On the $270,000 loan above, the first payment puts about $1,462.50 toward interest and $244.08 toward principal. As the balance falls, the interest portion shrinks and the principal portion grows, so by the final years almost every dollar reduces what you owe. This schedule is called amortization, and it is why early extra payments save the most interest.

Why your payment can change#

On a fixed-rate loan the principal and interest never move, but the full payment can. Property tax rates and home assessments rise, and insurance premiums change at renewal, so the lender re-runs your escrow each year and adjusts the monthly amount to match. Mortgage insurance, on the other hand, can fall away once your equity reaches 20%, which lowers the payment. Re-checking the calculator with current tax and insurance figures keeps your estimate close to the real bill.

Frequently asked questions#

What is included in a monthly mortgage payment?#

Principal, interest, property taxes, and homeowners insurance, plus mortgage insurance if the down payment is under 20%. Taxes and insurance are held in escrow and paid yearly, but billed to you each month.

How is the principal and interest figured?#

With M = P × r × (1 + r)ⁿ / ((1 + r)ⁿ − 1), where P is the loan, r is the annual rate divided by 12, and n is the number of months. A $250,000 loan at 7% over 30 years is $1,663.26 a month before taxes and insurance.

When is PMI required, and when does it stop?#

Private mortgage insurance applies when the down payment is below 20% of the price. It is added to the monthly payment until the balance drops below 80% of the home value, at which point you can request its removal.

How much does the rate change the payment?#

A lot. On a $250,000 loan over 30 years, the principal and interest run about $1,342 at 5%, $1,499 at 6%, and $1,663 at 7%. Each one-point step adds roughly $150 to $165 a month.

How do extra payments change the payoff?#

Extra money goes straight to principal, so it cuts the balance and the interest charged on it from that point on. Paying half the monthly amount every two weeks adds up to one extra payment a year and can shorten a 30-year loan by several years.