Mortgages guide
How to Calculate a Mortgage Payment
For a fixed-rate mortgage with monthly payments, the principal-and-interest payment depends on the amount borrowed, monthly interest rate, and number of payments. Property taxes, homeowners insurance, mortgage insurance, and HOA dues can raise the monthly housing cost but are separate from that loan formula.
The principal-and-interest formula
For a fully amortizing fixed-rate loan, payment = P × i ÷ [1 − (1 + i)^−n]. P is the loan principal, i is the monthly rate (annual nominal rate divided by 12), and n is the number of monthly payments. If the rate is zero, payment = P ÷ n. Lenders may use precise accrual and rounding conventions that cause small differences.
Worked example: $320,000 mortgage
Assume $320,000 borrowed for 30 years at a fixed 6.5% nominal annual rate, with monthly payments and no points or financed fees. The monthly rate is 0.065 ÷ 12 and n is 360. The formula gives principal and interest of about $2,022.62 per month; total scheduled payments are about $728,142, including about $408,142 of interest. Rounded values are estimates.
Add the other housing costs
A useful monthly budget may include principal, interest, property taxes, homeowners insurance, mortgage insurance when applicable, and HOA dues. Some bills are paid directly, while others may be collected in escrow. Utilities, repairs, and maintenance are usually additional expenses. Ask the lender and local providers for current estimates.
Inputs that change the result
A larger down payment reduces the principal. A lower rate or shorter term changes the payment and total interest. Adjustable-rate terms can change later payments; an initial payment estimate does not show every future reset. Fees can affect cash due at closing and the effective borrowing cost even when they do not change the quoted principal-and-interest amount.
Use an estimate before making an offer
Compare the calculator output with a written Loan Estimate and verify taxes, insurance, HOA, and mortgage insurance. The estimate does not establish approval, lock a rate, or determine what is affordable for your household. Leave room for maintenance, savings, and other obligations.
Frequently asked questions
Does a mortgage payment include taxes and insurance?
The principal-and-interest formula does not; a total housing estimate may include those costs and other charges.
What is the monthly rate in the formula?
For a basic monthly model, divide a nominal annual rate by 12. Contract accrual details can differ.
Sources and further reading
Try the calculator
Use the Mortgage Calculator to explore your own numbers with the assumptions shown in the tool.
Related guides
Educational content only; not individualized financial, tax, or legal advice.