How a mortgage payment is calculated

The payment in one paragraph

A fixed-rate mortgage payment is built so the loan reaches zero at the end of the term if you pay exactly the scheduled amount. Early months are mostly interest. Later months are mostly principal. The mortgage payment calculator prices that principal-and-interest figure and, only if you ask, adds flat monthly tax, insurance, and PMI on top. Those add-ons do not pay the loan down.

The formula in plain English

M = P × [r(1+r)^n] / [(1+r)^n − 1]
r = annual rate / 12
n = years × 12
Housing payment = M + monthly tax + insurance + PMI

P is the amount borrowed. r is the note rate divided by 12, not an APR that already folds in fees. n is the number of monthly payments. If the rate is zero, the payment is simply P divided by n.

A worked example

Take 300,000 at 6.5% for 30 years. Principal and interest lands near 1,896 a month. The same amount for 15 years at the same rate costs more each month and far less interest over the life of the loan. Add 250 of property tax and 120 of insurance and the check you write is about 370 higher, but the balance chart does not move. That split is the point: the loan math and the housing budget are different questions.

Use Scenario B on the mortgage payment calculator for the 15-year case. The year-by-year table shows principal, interest, ending balance, and housing paid when add-ons are on.

How to read the result

The green balance line is Scenario A. Scenario B is the second line when you turn comparison on. A line that falls faster is the shorter or cheaper-rate loan, not automatically the better budget. Read total interest next to the monthly payment. If you only need the month-by-month split, open the amortization schedule. If you are deciding whether to replace a loan you already have, use the refinance calculator. Extra principal belongs on the payoff calculator, which deliberately leaves tax and insurance out.

Brazilian readers comparing Tabela Price with SAC should use Price vs SAC. Price uses this same level-payment formula. SAC does not.

What this page leaves out

PMI in real life often drops after you reach a loan-to-value threshold. This model keeps the monthly PMI you type for the whole term. Taxes and insurance do not inflate. The payment is not rounded to the cent the way a servicer statement is, and it is not an APR disclosure. Nothing here is a lender quote.

FAQ

Is the housing payment the same as principal and interest?

Only when tax, insurance, and PMI are zero. Otherwise the housing payment is principal and interest plus those flat add-ons.

Why compare 15 and 30 years?

The shorter term usually raises the payment and cuts total interest. Seeing both numbers stops the decision from being “which bill is smaller this month.”

Does a lower rate always win?

A lower rate on a much larger loan, or a longer term, can still cost more interest. Change one input at a time in Scenario B.

Can I fill the rate from a market average?

Yes. The 30-year average fills the mortgage rate from the Freddie Mac PMMS, and you can still edit the field. The link stores the number you apply. Indicative rate, not a recommendation.

Is this financial advice?

No. The calculator runs in your browser for education. It does not know your credit, taxes, or the fees a lender will charge.

Related guides

• How much home you can afford — the income ceiling before you price one loan.

Try it with your figures

Open the mortgage payment calculator, set the loan, rate, and term, then add tax or insurance only if you want them in the housing payment. Share the URL if you want the same inputs again — the numbers stay in the link, not on a server.