How to Calculate Mortgage Payment — Free Monthly Payment Calculator

The mortgage payment formula

Monthly payment M for a fixed-rate mortgage: M = P × [r(1+r)ⁿ / ((1+r)ⁿ − 1)] where P is principal, r is monthly interest rate (annual ÷ 12), and n is number of monthly payments (years × 12). It's the same equation banks use. The mortgage calculator runs it plus the amortization breakdown showing how each payment splits between principal and interest.

Why the first years feel like nothing goes to principal

On a 30-year mortgage at 7%, your first month's payment is ~83% interest / 17% principal. By year 15 it crosses to 50/50. By year 28 it's reversed. This isn't a trick — it's how amortization works: interest is charged on the outstanding balance, which is highest at the beginning. Extra principal payments early have outsized impact because they reduce every future interest charge.

15-year vs 30-year comparison

Metric	30-year at 7%	15-year at 6.5%
Loan	$400,000	$400,000
Monthly payment	$2,661	$3,484
Total interest paid	$558,035	$227,088
Total paid	$958,035	$627,088

Same house, $330,947 difference in interest. The 15-year costs $823 more per month but saves more than the entire value of the original loan.

What the monthly payment doesn't include

The formula gives principal + interest (P&I) only. Your actual monthly housing cost typically adds:

• Property tax — typically 0.5-2% of home value per year, billed monthly into escrow
• Homeowner's insurance — typically $800-2,500 per year
• Private Mortgage Insurance (PMI) — required if down payment is below 20%; typically 0.5-1.5% of loan annually
• HOA fees — condos and planned communities only

Related tools

For non-mortgage loans (auto, personal, student), use the EMI calculator. For any fixed-installment loan, the loan calculator works identically. To translate "APR" from a lender quote into true annual cost (fees included), combine the percentage calculator with the fee schedule — APR is just the equivalent rate when upfront fees are rolled in.