How to Calculate Your Monthly Mortgage Payment
A monthly mortgage payment has two parts: principal and interest, which come from a fixed formula, and property taxes and insurance, which depend on where you live. Here is how each is calculated and what moves the total.
The Components of a Monthly Mortgage Payment
Your monthly payment usually has four components, often abbreviated PITI: principal, interest, taxes, and insurance.
Principal is the portion of your payment that reduces your loan balance. Early in the term it is relatively small, and it grows over time as less of each payment goes to interest.
Interest is the cost of borrowing, charged on the remaining balance. In the early years it is the largest part of each payment.
Property taxes are often collected by your lender and held in an escrow account to pay your annual tax bill. The amount depends on your home's assessed value and local tax rates.
Homeowners insurance protects the property against damage and is required by lenders. On a conventional loan with less than 20% down, you'll usually also pay private mortgage insurance (PMI), which protects the lender if you default.
The Mortgage Payment Formula
The standard formula for a fixed-rate loan is M = P[r(1+r)^n]/[(1+r)^n − 1], where M is the monthly payment, P the loan amount, r the monthly interest rate (annual rate ÷ 12), and n the total number of payments.
Worked example: you buy a $350,000 home with a 20% down payment ($70,000), leaving a $280,000 loan. With a 30-year fixed mortgage at 6.5%, the monthly rate is 0.065 ÷ 12 ≈ 0.0054167 and n = 360.
M = 280,000 × [0.0054167 × (1.0054167)^360] ÷ [(1.0054167)^360 − 1]. Since (1.0054167)^360 ≈ 6.9918, M ≈ 280,000 × 0.037872 ÷ 5.9918 ≈ $1,770 a month for principal and interest. The mortgage payment calculator does the same arithmetic without rounding, and adds your annual property tax and insurance to give the full PITI figure.
This amount covers only principal and interest. Add property taxes, insurance, and PMI if it applies to get your total monthly housing payment.
What Changes the Payment
Loan amount has the most direct impact. On a 30-year fixed loan, each $10,000 borrowed adds about $54 a month at 5%, $63 at 6.5%, and $73 at 8%.
Interest rate matters more than it looks. On a $300,000, 30-year loan, going from 6% to 6.5% raises the payment from about $1,799 to $1,896, roughly $98 more per month.
Loan term trades monthly payment against total interest. At the same 6.5% rate, a 15-year payment is about 38% higher than a 30-year payment; because 15-year loans usually carry somewhat lower rates, the real gap is often a bit smaller. In return you pay far less interest over the life of the loan.
Down payment size affects both the loan amount and, on conventional loans, whether you pay PMI. Freddie Mac estimates PMI at roughly $30 to $70 a month per $100,000 borrowed, depending on your down payment and credit score. The PMI Removal calculator estimates how many months it takes to reach the 80% or 78% loan-to-value point at which PMI can be dropped.
Using the Mortgage Payment Calculator
The mortgage payment calculator takes the loan amount (price minus down payment), the annual interest rate, a term of 15, 20 or 30 years, and your annual property tax and homeowners insurance. It returns the monthly PITI payment and charts the remaining balance over the life of the loan. If you don't have a rate quote yet, use a current published average and adjust later. PMI and HOA dues are not inputs, so add your estimates to the result if they apply.
Change one input at a time (loan amount, rate, term) to see which matters most for your budget. To work backwards from your income to a price range, apply the common 28/36 debt-to-income limits.
Ways to Lower the Payment
Increase your down payment. Each extra dollar down reduces the loan, and reaching 20% down on a conventional loan avoids PMI. An extra $20,000 down cuts the principal-and-interest payment by about $126 a month at 6.5% over 30 years.
Improve your credit score before applying. Mortgage pricing improves at higher credit-score tiers, so paying down card balances, correcting credit report errors, and avoiding new credit before you apply can lower your rate.
Shop multiple lenders. Quotes for the same borrower differ, and lenders offer different programs for first-time buyers, veterans, and other groups. Compare the Loan Estimates side by side.
Consider different terms and programs. Adjustable-rate mortgages or 15-year terms may offer lower rates depending on your situation, and government-backed FHA, VA and USDA loans have their own down-payment and insurance rules.
The figures on this page are estimates for a standard fixed-rate loan, not financial advice; your lender's Loan Estimate shows the actual payment.
Related guide: how to calculate compound interest.