Mortgage
Monthly payment + amortization
About This Calculator
A mortgage is a loan used to purchase real estate, secured by the property itself. Your monthly payment covers principal (reducing the loan balance) and interest. In early years most of your payment goes toward interest; over time more goes toward principal — a process called amortization. Understanding your mortgage helps you evaluate affordability, compare loan options, and decide whether to make extra payments.
Formula
M = P × [r(1+r)^n] ÷ [(1+r)^n − 1]
M = monthly payment, P = loan principal, r = monthly interest rate (annual rate ÷ 12), n = total number of payments (years × 12).
Example Calculation
$300,000 home loan at 6.5% annual interest for 30 years.
- r = 6.5% ÷ 12 = 0.005417
- n = 30 × 12 = 360 payments
- M = 300,000 × [0.005417 × (1.005417)^360] ÷ [(1.005417)^360 − 1]
- M = 300,000 × 0.006321 = $1,896.20
Monthly payment $1,896 — total paid $682,632 (of which $382,632 is interest)
Monthly Payment by Loan Amount & Rate (30-year term)
| Loan Amount | 5.5% | 6.5% | 7.5% | 8.5% |
|---|---|---|---|---|
| $150,000 | $851 | $948 | $1,049 | $1,153 |
| $250,000 | $1,419 | $1,580 | $1,748 | $1,922 |
| $300,000 | $1,703 | $1,896 | $2,098 | $2,306 |
| $400,000 | $2,271 | $2,528 | $2,797 | $3,075 |
| $500,000 | $2,839 | $3,160 | $3,497 | $3,843 |
Frequently Asked Questions
How does a larger down payment affect my mortgage?
A larger down payment reduces your loan principal, lowering monthly payments and total interest paid. Putting down 20% or more also eliminates Private Mortgage Insurance (PMI), saving 0.5–1.5% of the loan value annually.
What is amortization?
Amortization is the process of paying off your loan through scheduled payments. Early payments are mostly interest; later payments are mostly principal. An amortization schedule shows the exact breakdown for every payment over the loan term.
Should I choose a 15-year or 30-year mortgage?
A 15-year mortgage has higher monthly payments but you pay significantly less total interest and build equity faster. A 30-year mortgage has lower payments but costs more overall. Choose based on your cash flow and long-term goals.
What is PMI and how do I avoid it?
Private Mortgage Insurance (PMI) is required when your down payment is less than 20% of the home price. It protects the lender and typically costs 0.5–1.5% of the loan per year. Avoid it by putting down 20% or more, or request removal once your equity reaches 20%.