🏡 Buying a home is one of the biggest financial decisions you’ll make — and understanding your monthly mortgage payment is key to budgeting wisely. In this guide, we’ll break down how to calculate your mortgage payment and give you a simple calculator to estimate yours instantly.
Table of Contents
Use the calculator below to estimate your monthly mortgage payment based on loan amount, interest rate, and loan term
🙋♀️ What Is a Mortgage Payment?
A mortgage payment is the amount you pay your lender each month to repay your home loan. It typically includes:
- Principal: The amount borrowed
- Interest: The cost of borrowing
- Taxes and Insurance (optional): May be included in escrow
This article focuses on calculating principal and interest — the core of every mortgage payment.
🧮 Mortgage Payment Formula
The standard formula for calculating a fixed-rate mortgage payment is:
M = P * [r(1 + r)^n] / [(1 + r)^n – 1]Where:
- M = monthly payment
- P = loan amount (principal)
- r = monthly interest rate (annual rate ÷ 12)
- n = number of monthly payments (loan term in years × 12)
💰 Example Calculation
Let’s say:
- Loan Amount = $300,000
- Interest Rate = 6% annually
- Term = 30 years
Step 1: Convert annual rate to monthlyr = 0.06 / 12 = 0.005
Step 2: Total number of paymentsn = 30 × 12 = 360
Step 3: Plug into the formulaM = 300,000 × [0.005(1 + 0.005)^360] / [(1 + 0.005)^360 – 1]
Result:M ≈ $1,798.65/month
💡 Final Thoughts
Understanding how your mortgage payment is calculated helps you make smarter financial decisions, compare loan offers, and plan for the future. Try different inputs in the calculator above to explore how changes in interest rates or loan terms affect your payment.