How is a monthly mortgage payment calculated?

Monthly mortgage payments are calculated using the loan amount, interest rate, and loan term. The formula accounts for principal and interest, but your total payment may also include property taxes, insurance, and PMI.

What is an amortization schedule?

An amortization schedule shows how each monthly payment is split between principal and interest over the life of the loan. Early payments are mostly interest, while later payments are mostly principal.

Should I choose a 15-year or 30-year mortgage?

A 15-year mortgage has higher monthly payments but saves significantly on total interest. A 30-year mortgage offers lower monthly payments but costs more in total interest over the life of the loan.

How is a monthly mortgage payment calculated?

Monthly mortgage payments are calculated using the loan amount, interest rate, and loan term. The formula accounts for principal and interest, creating equal monthly payments over the life of the loan. Property taxes, insurance, and PMI may also be included in your total monthly payment.

What is an amortization schedule?

An amortization schedule is a table showing each mortgage payment broken down into principal and interest portions over the life of the loan. In the early years, most of your payment goes toward interest. Over time, a larger portion goes toward paying down the principal.

What is PMI and when is it required?

Private Mortgage Insurance (PMI) is typically required when your down payment is less than 20% of the home's purchase price. PMI protects the lender if you default on the loan. It usually costs between 0.5% and 1% of the loan amount annually and can be removed once you reach 20% equity.

Should I choose a 15-year or 30-year mortgage?

A 15-year mortgage has higher monthly payments but lower total interest costs and a lower interest rate. A 30-year mortgage has lower monthly payments but you pay significantly more interest over the life of the loan. Choose based on your budget and financial goals.

Mortgage Calculator

Calculate your monthly mortgage payment, see the full amortization schedule, and understand how much you will pay in interest over the life of your loan.

Loan Details

Home Price

Down Payment

20.0% down ($280,000 loan)

Loan Term

Interest Rate

Annual Property Tax

Annual Home Insurance

Estimated Monthly Payment

$2,161

Principal & Interest

$1,770

Property Tax

$292

Insurance

$100

Loan Amount

$280,000

Total Interest

$357,125

Total Cost

$778,125

Total Cost Breakdown

Principal$280,000

Interest$357,125

Property Tax$105,000

Insurance$36,000

Loan Balance Over Time

Remaining Balance Principal Paid

Amortization Schedule

Year	Principal	Interest	Remaining
1	$3,130	$18,108	$276,870
4	$3,801	$17,436	$266,167
7	$4,618	$16,620	$253,165
10	$5,609	$15,629	$237,373
13	$6,813	$14,425	$218,191
16	$8,275	$12,962	$194,890
19	$10,052	$11,186	$166,588
22	$12,210	$9,028	$132,210
25	$14,831	$6,407	$90,452
28	$18,015	$3,223	$39,729
30	$20,508	$729	$0

Understanding Your Mortgage

A mortgage is a loan used to purchase real estate, where the property itself serves as collateral. Your monthly payment typically consists of four components, often referred to as PITI: Principal, Interest, Taxes, and Insurance.

The Mortgage Payment Formula

M = P[r(1+r)ⁿ] / [(1+r)ⁿ - 1]

Where: M = monthly payment, P = loan principal, r = monthly interest rate, n = total number of payments

Key Takeaways

A larger down payment reduces your loan amount, monthly payment, and total interest paid over the life of the loan.
A 15-year mortgage has higher monthly payments but saves significantly on total interest compared to a 30-year term.
In the early years of a mortgage, most of your payment goes toward interest. Over time, more goes toward principal.
Property taxes and insurance can add 20-40% to your base principal and interest payment.