Mortgage

Turning Loan Amount, Rate, and Term Into a Monthly Payment

A mortgage payment is calculated from the loan amount, interest rate, and term using the standard fixed-rate amortization formula. Enter those three figures and this calculator shows your monthly payment — plus the bigger picture: how much you’ll pay in total over the life of the loan, how much of that is interest versus principal, and how much an extra monthly payment toward principal could save you in both time and interest.

A mortgage payment stays the same every month, but what that payment goes toward doesn’t: early on, most of it pays interest, and only a small part reduces the principal balance. Over time, that split gradually flips. This calculator’s “total interest” and extra-payment figures come from simulating that month-by-month split, not just a single formula.

Your real monthly housing payment is usually more than just principal and interest. Lenders often collect property taxes and homeowners insurance along with the loan payment (held in an escrow account and paid on your behalf), and you may also owe private mortgage insurance (PMI) if your down payment was under 20%, plus homeowners-association (HOA) dues. Together these four parts — Principal, Interest, Taxes, and Insurance — are known as PITI. Enter any of them under “Add property taxes & insurance” and the monthly payment above becomes your true all-in cost, with a breakdown of where each dollar goes.

Entering an optional first payment date adds an estimated payoff date — the month you’d make your very last payment — to the results below, using however many months the loan actually takes at your entered payment (including any extra monthly payment toward principal).

The Formula

The standard fixed-rate amortization formula:

$$M = \vA{P} \times \frac{\vB{r}(1+\vB{r})^{\vC{n}}}{(1+\vB{r})^{\vC{n}} - 1}$$

where $M$ is the monthly payment, $\vA{P}$ is the loan principal, $\vB{r}$ is the monthly interest rate (the annual rate divided by 12), and $\vC{n}$ is the total number of monthly payments (the term in years times 12).

The extra-payment comparison doesn’t have as clean a formula — it’s simulated month by month: each month, interest accrues on the remaining balance, the payment (plus any extra) reduces that balance, and the process repeats until the balance reaches zero. Comparing how many months that takes with and without an extra payment gives the time and interest saved.

Worked Example

A $300,000 loan at 6% annual interest over 30 years:

1. Monthly rate: $\vB{r} = 6\% \div 12 = 0.5\%$ ($0.005$ as a decimal).
2. Number of payments: $\vC{n} = 30 \times 12 = 360$.
3. Applying the formula gives a monthly payment of about $1,798.65.

Over the full 30-year term, that’s roughly $647,500 paid in total — about $347,500 of which is interest, more than the original loan amount itself. Adding just $200 extra toward principal every month on this same loan cuts multiple years off the payoff time and saves tens of thousands of dollars in interest, which is exactly what the “extra monthly payment” field above shows for your own numbers.

Key Factors to Consider

• A shorter loan term dramatically reduces total interest paid, even at the same rate. A 15-year loan carries a higher monthly payment than a 30-year loan for the same amount, but because it accrues interest for half as many months, the total interest paid over the life of the loan is typically far lower — worth comparing both terms side by side (see Compare Calculations above) rather than defaulting to the longer term for the lower payment alone.
• Your interest rate is driven heavily by credit score, down payment size, and loan type. A larger down payment reduces lender risk and often unlocks a better rate, a higher credit score typically qualifies for meaningfully lower rates, and different loan types (conventional, FHA, VA) each carry their own rate and insurance structure — see the FHA/VA Loan Calculator for that comparison specifically.
• PMI isn’t permanent on a conventional loan — it can be removed once enough equity builds up. Federal law generally allows requesting PMI cancellation once the loan balance reaches 80% of the home’s original value, and lenders are required to cancel it automatically at 78% — tracking loan-to-value over time (see the LTV Calculator) can reveal when PMI is no longer required.
• Refinancing later can meaningfully change this picture if rates drop or your situation changes. A mortgage taken out today isn’t a permanent commitment to today’s rate — see the Refinance Calculator for how to evaluate whether a future refinance would actually save money once closing costs on the new loan are factored in.

Common Mistakes

• Budgeting only for principal and interest. The payment a lender actually collects each month (PITI) usually also includes property tax, homeowners insurance, and PMI if the down payment is under 20% — enable the escrow fields above to see the fuller, more realistic monthly number.
• Forgetting closing costs. Origination fees, appraisal, title insurance, and other one-time closing costs typically add several percent of the loan amount due at signing — not reflected in the monthly payment figure at all.
• Assuming a quoted rate is locked in. Mortgage rates can move between pre-approval and closing unless a rate lock is specifically in place — the rate used here is illustrative, not a guarantee of what a lender will actually offer.
• Confusing the interest rate with the APR. The interest rate drives the monthly payment shown here, but the APR (which folds in fees) is usually higher and is the better number for comparing loan offers with different fee structures — see the APR Calculator.

Useful to Know

• Wondering whether you can actually afford the payment this calculator shows? Mortgage Affordability Calculator works backward from your income and debts to a realistic budget.
• Already have a mortgage and curious whether refinancing at today’s rates makes sense? Refinance Calculator weighs closing costs against the new payment.
• Trying to decide between buying this home or continuing to rent? Rent vs. Buy Calculator compares the two paths side by side.