How to Calculate Mortgage Payments: A Complete Guide

Understanding your mortgage payment is essential before committing to one of life's largest financial decisions.

The Mortgage Payment Formula

Your monthly mortgage payment (M) is calculated using:

M = P[r(1+r)^n]/[(1+r)^n-1]

Where: - P = Principal loan amount - r = Monthly interest rate (annual rate ÷ 12) - n = Number of payments (loan term × 12)

Example Calculation

For a $400,000 loan at 7% annual interest over 30 years: - r = 0.07/12 = 0.00583 - n = 30 × 12 = 360 - M = $2,661/month

Factors That Affect Your Payment

Interest Rate — Even a 0.5% difference can mean hundreds of dollars monthly over the loan term.

Loan Term — A 15-year mortgage has higher monthly payments but dramatically lower total interest paid.

Down Payment — Putting down 20%+ eliminates private mortgage insurance (PMI) and reduces your principal.

Property Taxes & Insurance — Most lenders escrow these, adding $300–800/month to your payment.

Use Our Free Calculator

Our Mortgage Calculator handles all the math instantly. Just enter your loan amount, interest rate, and term to see your monthly payment, total interest, and full amortization schedule.