How to Calculate Your Mortgage Payment
Master the mortgage payment formula, see real examples across loan amounts and interest rates, and find your exact monthly payment instantly.
Quick answer: Your monthly mortgage payment is calculated with the formula M = P[r(1+r)ⁿ] / [(1+r)ⁿ – 1], where P is the loan principal, r is the monthly interest rate, and n is the number of payments. For a $300,000 loan at 6.5% over 30 years, that's $1,896/month.
The Mortgage Payment Formula Explained
Every fixed-rate mortgage payment is calculated using the same standard amortization formula. Understanding it puts you in control of the biggest financial decision most people ever make.
M = P × [r(1 + r)ⁿ] / [(1 + r)ⁿ – 1]
M = Monthly payment | P = Loan principal | r = Monthly interest rate (annual ÷ 12) | n = Total number of payments (years × 12)
Step-by-Step Example
Let's calculate the payment on a $300,000 loan at 6.5% for 30 years:
- Convert the annual rate: r = 6.5% ÷ 12 = 0.005417
- Calculate total payments: n = 30 × 12 = 360
- Plug into formula: M = 300,000 × [0.005417(1.005417)³⁶⁰] / [(1.005417)³⁶⁰ – 1]
- Result: M = $1,896.20/month
What Makes Up Your Payment
Your total monthly housing payment (often called PITI) has four components:
The loan payment itself
~1-2% of home value/year
Homeowners + PMI if <20% down
Monthly Payments by Loan Amount and Rate
Use this reference table for a 30-year fixed mortgage (principal & interest only):
| Loan Amount | 5.5% | 6.0% | 6.5% | 7.0% |
|---|---|---|---|---|
| $200,000 | $1,136 | $1,199 | $1,264 | $1,331 |
| $300,000 | $1,703 | $1,799 | $1,896 | $1,996 |
| $400,000 | $2,271 | $2,398 | $2,528 | $2,661 |
| $500,000 | $2,839 | $2,998 | $3,160 | $3,327 |
| $750,000 | $4,258 | $4,497 | $4,740 | $4,990 |
Amounts rounded to nearest dollar. Does not include taxes, insurance, or PMI.
15-Year vs. 30-Year Mortgage
A shorter term means higher monthly payments but dramatically less total interest paid:
| $300,000 at 6.5% | Monthly Payment | Total Interest | Total Paid |
|---|---|---|---|
| 30-year | $1,896 | $382,633 | $682,633 |
| 15-year | $2,613 | $170,389 | $470,389 |
⚠️ Important: These calculations cover principal and interest only. Your actual payment will be higher once you add property taxes (~$200–$600/month), homeowners insurance (~$100–$300/month), and PMI if your down payment is under 20%.
How to Lower Your Mortgage Payment
- Make a larger down payment — reduces loan amount and can eliminate PMI
- Improve your credit score — even 0.5% lower rate saves tens of thousands
- Choose a longer term — 30-year has lower payments than 15-year (but more total interest)
- Shop multiple lenders — rates vary significantly between lenders
- Buy discount points — pay upfront to reduce your interest rate
📐 How We Calculate This
We use the standard amortization formula: M = P[r(1+r)^n] / [(1+r)^n – 1], where P is the principal, r is the monthly interest rate, and n is the total number of payments. Property taxes and insurance are estimated based on national and state-level averages from the U.S. Census Bureau.
Interest rates shown reflect current market ranges from Freddie Mac's Primary Mortgage Market Survey. Actual rates depend on credit score, down payment, loan type, and lender.
📚 Sources & References
🏠 Calculate Your Mortgage Payment
Enter your loan amount, interest rate, and term to see your exact monthly payment with a full amortization schedule.
Open Mortgage Calculator →Frequently Asked Questions
What is a good mortgage rate in 2026?
As of early 2026, average 30-year fixed rates hover between 6.0%–7.0%. Rates below 6% are considered excellent. Your actual rate depends on credit score, down payment, loan type, and lender.
How much house can I afford?
A common guideline is the 28/36 rule: spend no more than 28% of gross monthly income on housing costs, and no more than 36% on total debt. For a $100K household income, that means roughly $2,333/month for housing.
Does the formula change for adjustable-rate mortgages?
The formula is the same, but with an ARM your rate resets periodically (typically after 5 or 7 years). The initial rate is usually lower, but payments can increase significantly at adjustment. Use a fixed-rate calculator for comparison.