How to Calculate a Mortgage Payment

Understanding a monthly mortgage payment is one of the most important steps in buying a home. The formula might look complex, but this guide breaks it down simply — and the calculator below can verify every step in real time.

The Mortgage Payment Formula

The monthly payment M is calculated as:

M = P × [r(1+r)^n] / [(1+r)^n - 1]

Where:

P = Principal loan amount
r = Monthly interest rate (annual rate ÷ 12)
n = Total number of payments (years × 12)

Try It

Use the mortgage calculator below while following each step:

[tool:mortgage-calculator]

Breaking Down a $300,000 Loan at 6.5%

With a $300,000 loan at 6.5% interest over 30 years:

Monthly rate (r) = 6.5% ÷ 12 = 0.5417%
Total payments (n) = 30 × 12 = 360
Monthly payment = $1,896.20

Over 30 years, the estimated interest totals approximately $382,633 on top of the $300,000 principal. A higher down payment or shorter term may reduce the total interest paid over the life of the loan.

Factors That May Affect the Payment

Down payment size — a 20%+ down payment typically removes the need for PMI (Private Mortgage Insurance)
Loan term — shorter terms, such as 15 years, often carry lower interest rates (typically 0.5–0.75% less)
Lender comparison — rates can vary by 0.5%+ between lenders
Credit profile — borrowers with higher credit scores (e.g. 750+) may qualify for lower rates