Mortgage Payment Calculator

Monthly Mortgage Payment and Interest Estimator

Mortgage Payment Formula

Formula

\[ \text{Monthly Payment} = \frac{P \times r}{1 - (1 + r)^{-n}} \] \[ \text{Total Interest} = (\text{Monthly Payment} \times n) - P \]

Where:

$P$ — loan amount, or principal (the amount borrowed)
$r$ — monthly interest rate (annual rate divided by 12)
$n$ — total number of monthly payments (loan term in years × 12)

The first formula gives the fixed monthly payment for a fully amortizing loan: a payment large enough to cover the interest each month and pay off the entire principal by the end of the term. The second formula sums all payments over the life of the loan and subtracts the principal to find the total interest cost.

Mortgage Payment – Calculation Example

Example: you take out a $250,000 mortgage at an annual interest rate of 5% for a 30-year term, with no additional monthly payment.

\[ r = \frac{5\%}{12} = 0.0041667, \quad n = 30 \times 12 = 360 \]

\[ \text{Monthly Payment} = \frac{250{,}000 \times 0.0041667}{1 - (1 + 0.0041667)^{-360}} = \frac{1{,}041.67}{0.77617} \approx 1{,}342.05 \]

\[ \text{Total Interest} = (1{,}342.05 \times 360) - 250{,}000 \approx 233{,}138 \]

Result: the monthly payment is about $1,342.05, and the total interest paid over 30 years is about $233,138 — nearly as much as the loan itself.

How to Use the Mortgage Payment Calculator

Enter the Loan Amount — the price of the home minus your down payment, i.e. the amount you are borrowing.
Enter the Annual Interest Rate as a percentage (for example, 5 for 5%, or 5.25 for 5.25%).
Enter the Loan Term (Years) — common terms are 15, 20, or 30 years.
Optionally, enter a Monthly Additional Payment — any extra amount you plan to pay toward the principal each month. It is added to the displayed monthly payment.
Read the results: Monthly Payment (including any extra payment) and Total Interest over the full term.

What Is a Mortgage Payment?

A mortgage payment is the fixed amount you pay your lender each month on a standard fixed-rate, fully amortizing loan. Each payment has two parts: interest, which is the lender's charge for the money you borrowed, and principal, which reduces the loan balance. In the early years of the mortgage, most of the payment goes to interest; over time, the balance shifts until the final payments are almost entirely principal. This gradual shift is called amortization.

The size of the payment depends on three variables: how much you borrow, the interest rate, and how long you take to repay. A longer term lowers the monthly payment but increases total interest dramatically — as the example above shows, a 30-year loan at 5% can cost almost as much in interest as the original principal. A shorter term raises the monthly payment but can save you tens or hundreds of thousands of dollars in interest.

The Total Interest result tells you the true cost of borrowing. Comparing this figure across different rates and terms is often more revealing than comparing monthly payments alone. Note that this calculator considers only principal and interest; your actual monthly housing cost may also include property taxes, homeowners insurance, and, if your down payment is below 20%, private mortgage insurance (PMI).

Assumptions, Limitations, and Tips

Fixed rate assumed. The calculator assumes the interest rate never changes. For adjustable-rate mortgages (ARMs), the payment will change when the rate resets.
Extra payments reduce interest. Any amount you enter as a Monthly Additional Payment goes straight toward the principal. Paying even $100–$200 extra per month can shorten the loan by several years and cut total interest substantially — but the Total Interest shown does not yet account for that reduction, so treat it as a baseline.
Taxes and insurance are not included. Budget separately for property taxes, homeowners insurance, HOA fees, and PMI.
Check for prepayment penalties. Some loans charge a fee for paying off the balance early; see the Pre-Payment Penalty details before committing to extra payments.
Compare scenarios. Try the same loan amount at 15 vs. 30 years, or at rates 0.5% apart, to see how sensitive the total cost is. Our general Loan Calculator and Auto Loan Calculator work the same way for other types of financing.
Look beyond the rate. Fees and points affect the real cost of a mortgage; the Mortgage APR and Mortgage Discount Points calculators can help you compare offers on equal footing.

Frequently Asked Questions

Why is my actual mortgage payment higher than what the calculator shows?

This calculator covers only principal and interest. Your lender typically collects more each month through an escrow account that pays property taxes, homeowners insurance, and — if your down payment is under 20% — private mortgage insurance (PMI). HOA dues may also apply. Add these costs yourself to estimate your full monthly housing expense.

How much of my first payment goes to interest?

Multiply your loan balance by the monthly rate: for a $250,000 loan at 5%, that is $250{,}000 \times 0.0041667 \approx 1{,}041.67$. With a $1,342.05 payment, only about $300 goes to principal at first. Every following month the interest portion shrinks slightly and the principal portion grows — this shift is amortization.

How do extra principal payments shorten my loan?

An extra payment reduces your balance immediately, so less interest accrues each month and more of every regular payment goes to principal. A rough rule: paying one extra full payment per year on a 30-year loan can cut roughly 4–6 years off the term. Because this calculator adds the extra amount without shortening the term shown, use an amortization schedule for a precise payoff date.

What is a normal mortgage payment?

There is no single "normal" figure — it depends on loan size, rate, and term. Many lenders and financial advisors suggest keeping total housing costs (payment plus taxes and insurance) under about 28% of your gross monthly income, sometimes called the front-end ratio. Treat that as a general guideline, not a rule; your budget and other debts matter too.

Does the calculator handle a 0% interest rate?

Yes. When the annual rate is 0, the formula would divide by zero, so the calculator simply divides the loan amount evenly across all payments: a $240,000 loan over 30 years gives $240{,}000 \div 360 = 666.67$ per month, with zero total interest. Zero-rate mortgages are rare but occasionally offered as promotions.

Is a 15-year or 30-year mortgage better?

A 15-year loan carries a higher monthly payment but usually a lower rate and far less total interest — often saving six figures over the life of the loan. A 30-year loan keeps payments lower, freeing cash for emergencies, retirement investing, or higher-interest debt. A middle path: take the 30-year loan and pay extra when you can afford it, keeping flexibility.

Do biweekly payments save money?

Yes. Paying half your payment every two weeks results in 26 half-payments per year — the equivalent of 13 full monthly payments. That one extra payment per year goes to principal, shortening a 30-year loan by several years and reducing total interest. Check whether your lender charges a fee for biweekly programs; you can often achieve the same result free by simply adding 1/12 of a payment to each monthly check.