How to Calculate Your Monthly Mortgage Payment

Before you start house hunting, you need a number: your monthly mortgage payment. Lenders will quote you rates, but understanding the math yourself means you can spot a bad deal instantly. Here's the exact formula, worked examples at today's rates, and a faster way to get your answer.

The Mortgage Payment Formula

The standard formula for calculating a fixed-rate mortgage payment is:

M = P × [r(1+r)n] / [(1+r)n – 1]

Where:

  • M = monthly payment (principal + interest)
  • P = loan principal (home price minus down payment)
  • r = monthly interest rate (annual rate ÷ 12)
  • n = total number of payments (years × 12)

This formula only calculates principal and interest. Your real monthly payment also includes property taxes, homeowners insurance, and possibly PMI or HOA fees — covered later.

Step-by-Step Example: $350,000 at 6.7%

Let's calculate a payment for a $350,000 loan at 6.7% APR on a 30-year term:

  1. Find r: 6.7% ÷ 12 = 0.5583% = 0.005583
  2. Find n: 30 × 12 = 360 payments
  3. Calculate (1+r)n: (1.005583)360 = 7.4535
  4. Plug it in: M = $350,000 × [0.005583 × 7.4535] / [7.4535 – 1] = $2,252

Your monthly principal and interest payment on a $350,000 loan at 6.7% is about $2,252.

How the Rate Changes Everything: Same Loan, Different Rates

Even a small rate difference dramatically shifts your payment. Here's the same $400,000 loan on a 30-year fixed mortgage at different rates:

Rate Monthly P&I Total Interest
5.5% $2,271 $417,621
6.0% $2,398 $463,353
6.5% $2,528 $510,187
7.0% $2,661 $558,030
7.5% $2,797 $607,065

The jump from 5.5% to 7.5% costs you an extra $526 per month and $189,444 more in total interest. That's why even a quarter-point rate improvement matters.

Same Rate, Different Home Prices

At 6.7% on a 30-year fixed, here's what different purchase prices look like with 20% down:

Home Price Loan Amount Monthly P&I
$250,000 $200,000 $1,287
$350,000 $280,000 $1,802
$450,000 $360,000 $2,316
$550,000 $440,000 $2,831

The Full Payment: PITI Explained

Lenders quote P&I (principal and interest), but your actual out-of-pocket cost is PITI:

  • Principal — the loan amount you're paying back each month
  • Interest — the cost of borrowing, front-loaded (you pay more interest early on)
  • Taxes — property taxes, typically 0.5%–2.5% of home value per year, divided into monthly escrow payments
  • Insurance — homeowners insurance ($100–$300/mo) plus PMI if your down payment is under 20%

On a $350,000 home in a state with 1.2% property tax, your total PITI might look like $2,252 (P&I) + $350 (taxes) + $150 (insurance) = $2,752/month. Use our mortgage calculator to see the full breakdown for your area.

15-Year vs 30-Year: The Trade-Off

A 15-year mortgage has a lower rate (typically 0.5%–0.75% less) but a higher payment. Which is better? It depends on your goals:

$350,000 loan at 6.7% (30-year): $2,252/mo — $462,721 total interest

$350,000 loan at 6.0% (15-year): $2,955/mo — $181,893 total interest

The 15-year option costs $703 more per month but saves you $280,828 in interest. That's the power of a shorter term combined with a lower rate. Our payoff calculator shows you exactly how extra payments shorten your loan.

Skip the Manual Math — Use a Calculator

The formula works, but nobody wants to crunch exponents on a phone calculator. Our mortgage calculator handles the math instantly and includes taxes, insurance, and PMI so you see your real monthly payment — not just principal and interest.

Calculate Your Mortgage Payment Now →