The monthly mortgage payment is calculated with the standard amortization formula, which combines the loan principal (home price minus down payment), the monthly interest rate (the annual rate divided by 12), and the total number of payments (the term in years times 12) into one fixed amount. Each payment covers the accrued interest first; the remainder reduces the principal until the loan reaches zero at the end of the term.
Mortgage Calculator
Based on a $400,000 home with 20% down at 6.5% over 30 yrs.
- Total monthly payment
- $2,547.62
- Total interest
- $408,142.36
- Loan amount
- $320,000.00
- PMI (monthly)
- $0.00
- Payoff
- 30
Chart
| Year | Balance | Principal paid |
|---|---|---|
| 0 | $320,000.00 | $0.00 |
| 1 | $316,423.00 | $3,577.00 |
| 2 | $312,607.00 | $7,393.00 |
| 3 | $308,535.00 | $11,465.00 |
| 4 | $304,191.00 | $15,809.00 |
| 5 | $299,555.00 | $20,445.00 |
| 6 | $294,609.00 | $25,391.00 |
| 7 | $289,332.00 | $30,668.00 |
| 8 | $283,701.00 | $36,299.00 |
| 9 | $277,694.00 | $42,306.00 |
| 10 | $271,284.00 | $48,716.00 |
| 11 | $264,444.00 | $55,556.00 |
| 12 | $257,147.00 | $62,853.00 |
| 13 | $249,361.00 | $70,639.00 |
| 14 | $241,053.00 | $78,947.00 |
| 15 | $232,189.00 | $87,811.00 |
| 16 | $222,732.00 | $97,268.00 |
| 17 | $212,641.00 | $107,359.00 |
| 18 | $201,874.00 | $118,126.00 |
| 19 | $190,386.00 | $129,614.00 |
| 20 | $178,129.00 | $141,871.00 |
| 21 | $165,051.00 | $154,949.00 |
| 22 | $151,097.00 | $168,903.00 |
| 23 | $136,208.00 | $183,792.00 |
| 24 | $120,323.00 | $199,677.00 |
| 25 | $103,373.00 | $216,627.00 |
| 26 | $85,289.00 | $234,711.00 |
| 27 | $65,993.00 | $254,007.00 |
| 28 | $45,405.00 | $274,595.00 |
| 29 | $23,438.00 | $296,562.00 |
| 30 | $0.00 | $320,000.00 |
Quick examples
How it's calculated
- Subtract the down payment to get the loan amount
- price
- = 400,000
- d
- = 0.2
- 320,000
- Convert the APR to a monthly rate
- APR
- = 0.065
- 0.005417
- Apply the amortization formula
- P
- = 320,000
- r
- = 0.005417
- n
- = 360
- 2,022.62
How it works
The payment M for a fully-amortizing fixed-rate loan is M = P·r(1+r)ⁿ ⁄ ((1+r)ⁿ − 1), where P is the loan principal, r is the monthly interest rate (annual rate ÷ 12), and n is the number of payments (years × 12). When the rate is zero, the payment is simply P ÷ n. Property tax, insurance, HOA fees, and PMI are added on top to give the total monthly cost.
Worked example
For a $250,000 loan at 6% over 30 years: r = 0.06 ÷ 12 = 0.005, n = 360, so M = 250,000 × 0.005 × (1.005)³⁶⁰ ⁄ ((1.005)³⁶⁰ − 1) = $1,498.88 per month. Of the first payment, $1,250.00 goes to interest and $248.88 to principal.
Frequently asked questions
How is the monthly mortgage payment calculated?
- It uses the amortization formula, which spreads the loan principal and interest evenly across every payment so the balance reaches zero at the end of the term. Each payment covers that month's interest first; the rest reduces the principal.
What's included beyond principal and interest?
- The principal-and-interest figure is the loan payment. The total monthly cost adds property tax, homeowners insurance, HOA fees, and — if your down payment is under 20% — private mortgage insurance (PMI).
What is PMI and when does it stop?
- PMI protects the lender when you put down less than 20%. It is typically removed once your loan balance falls to 78% of the original home value (CFPB). This tool estimates PMI from an adjustable rate assumption — 0.5% of the loan per year by default — while the down payment is under 20%; your actual PMI depends on your credit score and loan-to-value, so treat it as an estimate.
How does a larger down payment change the payment?
- A larger down payment lowers the loan principal, which lowers both the monthly payment and the total interest, and above 20% it removes PMI entirely.
15-year vs 30-year term?
- A 15-year loan has higher monthly payments but a much lower total interest cost, because the principal is repaid faster and less interest accrues.
How is total interest computed?
- Total interest is the sum of the interest portion of every scheduled payment over the life of the loan (plus the effect of any extra payments, which shorten the term and reduce interest).
How accurate is this, and what doesn't it include?
- The payment math is exact for a fixed-rate loan. It does not include closing costs, escrow adjustments, adjustable-rate changes, or exact lender PMI rates, which vary — treat the total as a close estimate.
How we know this is right
- Last reviewed
- Jul 21, 2026
- Precision
- Rounded to 2 decimal places.
Sources
- Consumer Financial Protection Bureau How do mortgage lenders calculate monthly payments? · Reviewed Jul 18, 2026
- LibreTexts (Las Positas College) Amortized Loans (Math for Liberal Arts, §8.05) · Reviewed Jul 18, 2026
- Consumer Financial Protection Bureau When can I remove private mortgage insurance (PMI) from my loan? · Reviewed Jul 21, 2026