To calculate your mortgage payment, use the formula M = P[r(1+r)^n]/[(1+r)^n-1], where P is the loan amount, r is the monthly interest rate (annual rate ÷ 12), and n is the number of payments (loan term in months). For a $300,000 loan at 6.5% for 30 years, the monthly principal and interest payment is $1,896. Add property taxes, insurance and PMI for your total monthly payment.
The Mortgage Payment Formula
The standard amortization formula calculates your fixed monthly payment.
Formula Breakdown
M = P[r(1+r)^n] / [(1+r)^n - 1]
Where:
- M = Monthly payment (principal and interest only)
- P = Principal (loan amount)
- r = Monthly interest rate (annual rate ÷ 12)
- n = Total number of payments (years × 12)
Step-by-Step Calculation
Example: $250,000 loan at 6% for 30 years
Step 1: Convert annual rate to monthly rate
- 6% ÷ 12 = 0.5% = 0.005
Step 2: Calculate total number of payments
- 30 years × 12 = 360 payments
Step 3: Calculate (1+r)^n
- (1 + 0.005)^360 = 6.0226
Step 4: Apply the formula
- M = $250,000 × [0.005 × 6.0226] / [6.0226 - 1]
- M = $250,000 × [0.0301] / [5.0226]
- M = $250,000 × 0.005996
- M = $1,499 per month
Quick Mortgage Payment Examples
Here are calculated payments for common loan amounts at various rates.
$200,000 Loan (30-year fixed)
| Interest Rate | Monthly P&I |
|---|---|
| 5.0% | $1,074 |
| 5.5% | $1,136 |
| 6.0% | $1,199 |
| 6.5% | $1,264 |
| 7.0% | $1,331 |
| 7.5% | $1,398 |
$300,000 Loan (30-year fixed)
| Interest Rate | Monthly P&I |
|---|---|
| 5.0% | $1,610 |
| 5.5% | $1,703 |
| 6.0% | $1,799 |
| 6.5% | $1,896 |
| 7.0% | $1,996 |
| 7.5% | $2,098 |
$400,000 Loan (30-year fixed)
| Interest Rate | Monthly P&I |
|---|---|
| 5.0% | $2,147 |
| 5.5% | $2,271 |
| 6.0% | $2,398 |
| 6.5% | $2,528 |
| 7.0% | $2,661 |
| 7.5% | $2,797 |
$500,000 Loan (30-year fixed)
| Interest Rate | Monthly P&I |
|---|---|
| 5.0% | $2,684 |
| 5.5% | $2,839 |
| 6.0% | $2,998 |
| 6.5% | $3,160 |
| 7.0% | $3,327 |
| 7.5% | $3,496 |
What’s Included in Your Mortgage Payment?
Your full monthly payment includes more than just principal and interest.
PITI: The Four Components
P - Principal: The portion that reduces your loan balance
I - Interest: The cost of borrowing money
T - Taxes: Property taxes collected monthly and paid annually
I - Insurance: Homeowners insurance premium
Additional Costs
PMI (Private Mortgage Insurance): Required if you put less than 20% down. Adds 0.5-1.5% of loan amount annually.
HOA Fees: If your property is in a homeowners association. Not escrowed—paid separately.
MIP (Mortgage Insurance Premium): For FHA loans. Similar to PMI but structured differently.
Full Payment Example
$350,000 home, 10% down, 6.5% rate:
| Component | Monthly Cost |
|---|---|
| Principal & Interest | $1,989 |
| Property Taxes | $365 |
| Homeowners Insurance | $150 |
| PMI | $130 |
| Total Payment | $2,634 |
The “advertised” P&I payment of $1,989 becomes $2,634 when you add everything.
15-Year vs. 30-Year Payments
Shorter terms mean higher payments but significant interest savings.
Payment Comparison
$350,000 loan:
| Term | Rate | Payment | Total Interest |
|---|---|---|---|
| 30 years | 6.5% | $2,212 | $446,362 |
| 20 years | 6.25% | $2,566 | $265,799 |
| 15 years | 5.75% | $2,912 | $174,160 |
Interest Savings
Choosing 15 years over 30 years:
- Higher monthly payment: +$700
- Interest saved: $272,202
- Years saved: 15 years
The 15-year payment is 32% higher, but you pay 61% less interest.
How Down Payment Affects Your Payment
A larger down payment reduces your loan amount and eliminates PMI at 20%.
Payment by Down Payment
$400,000 home at 6.5%:
| Down Payment | Loan Amount | P&I | PMI | Total |
|---|---|---|---|---|
| 3% ($12,000) | $388,000 | $2,452 | $323 | $2,775 |
| 5% ($20,000) | $380,000 | $2,401 | $253 | $2,654 |
| 10% ($40,000) | $360,000 | $2,275 | $180 | $2,455 |
| 20% ($80,000) | $320,000 | $2,022 | $0 | $2,022 |
Going from 5% to 20% down saves $632/month—that’s $7,584 per year.
How Interest Rate Affects Your Payment
Small rate changes have big impacts on monthly payments and total cost.
Rate Impact on $300,000 Loan
| Rate | Monthly P&I | Total Interest (30 yr) |
|---|---|---|
| 5.0% | $1,610 | $279,767 |
| 5.5% | $1,703 | $313,212 |
| 6.0% | $1,799 | $347,515 |
| 6.5% | $1,896 | $382,633 |
| 7.0% | $1,996 | $418,527 |
| 7.5% | $2,098 | $455,157 |
| 8.0% | $2,201 | $492,467 |
Each 0.5% rate increase adds about $100/month to the payment.
The Importance of Rate Shopping
Getting 6.5% instead of 7% on $350,000:
- Monthly savings: $117
- 30-year savings: $42,120
That’s why comparing rates from multiple lenders matters.
Calculating Affordability
Use your payment calculation to determine what you can afford.
The 28/36 Rule
28% rule: Housing costs should be under 28% of gross monthly income
36% rule: Total debt payments should be under 36% of gross monthly income
Affordability Example
Income: $8,000/month gross
28% of income: $2,240 max housing payment
Working backward:
- Subtract taxes ($350): $1,890
- Subtract insurance ($125): $1,765
- Max P&I: $1,765
At 6.5%, $1,765 P&I = approximately $295,000 loan
With 10% down, that’s roughly a $328,000 home
Adjustable Rate Mortgage Payments
ARM payments can change after the initial fixed period.
How ARM Payments Change
5/1 ARM example:
- Initial rate: 5.5% (fixed for 5 years)
- After year 5: Rate adjusts annually based on index + margin
- Caps limit how much rate can change
ARM Payment Calculation
$300,000 5/1 ARM:
| Year | Rate | Monthly P&I |
|---|---|---|
| 1-5 | 5.5% | $1,703 |
| 6 (rate rises 2%) | 7.5% | $2,064 |
| 7 (rate rises 2%) | 9.5% | $2,453 |
If rates rise to the cap, payments could increase significantly. Budget for potential increases.
Extra Payments Impact
See how extra payments reduce your balance and interest.
$200 Extra Monthly on $300,000 at 6.5%
| Metric | Standard | +$200/month |
|---|---|---|
| Monthly payment | $1,896 | $2,096 |
| Payoff time | 30 years | 23.5 years |
| Total interest | $382,633 | $289,412 |
| Interest saved | — | $93,221 |
One Extra Payment Per Year
Making one extra payment annually (or $158/month extra):
| Metric | Standard | +1 Payment/Year |
|---|---|---|
| Payoff time | 30 years | 25.5 years |
| Total interest | $382,633 | $317,500 |
| Interest saved | — | $65,133 |
Payment Calculation Tools
Online Calculators
Most mortgage websites offer free calculators:
- Bankrate
- NerdWallet
- Zillow
- Your lender’s website
Enter loan amount, rate, term and down payment for quick estimates.
Spreadsheet Formula
In Excel or Google Sheets, use the PMT function:
=PMT(rate/12, term*12, -loan_amount)
Example for $300,000 at 6.5% for 30 years: =PMT(0.065/12, 360, -300000) Result: $1,896.20
Rule of Thumb
For quick estimates at current rates (around 6.5%):
- Every $100,000 borrowed ≈ $632/month P&I
- $200,000 ≈ $1,264/month
- $300,000 ≈ $1,896/month
- $400,000 ≈ $2,528/month
Frequently Asked Questions
How do you calculate mortgage payment manually?
Use the formula M = P[r(1+r)^n]/[(1+r)^n-1]. Convert the annual rate to monthly (divide by 12), calculate total payments (years × 12), then apply the formula. Or use a financial calculator or spreadsheet for easier calculation.
What is the monthly payment on a $300,000 mortgage?
At 6.5% for 30 years, the principal and interest payment is $1,896. Add property taxes ($300), insurance ($125) and PMI if applicable (~$150) for a total around $2,470/month.
How much is a $400,000 mortgage per month?
At 6.5% for 30 years, the principal and interest payment is $2,528. With taxes, insurance and potential PMI, expect $3,000-$3,300 total monthly payment depending on your location and down payment.
Does mortgage payment include property taxes?
Usually yes. Most lenders require an escrow account that collects taxes and insurance monthly. Your payment includes these amounts, and the lender pays the bills when due. Some borrowers waive escrow and pay directly.
Why is my mortgage payment mostly interest?
Early in your loan, the balance is highest. Since interest is calculated on the balance, more of your payment covers interest. As you pay down principal over time, the interest portion shrinks and principal portion grows.
Can I lower my mortgage payment?
Yes. Options include: refinancing to a lower rate, extending your term (increases total interest), removing PMI at 20% equity, appealing property tax assessment, or shopping for cheaper homeowners insurance.
Sarah Mitchell
Licensed Mortgage Broker, 15+ Years Experience
Sarah has helped thousands of families navigate the mortgage process. She specializes in making complex loan information easy to understand.
Do Mortgage Calculators Include Taxes And Insurance
Learn about do mortgage calculators include taxes and insurance. Expert tips and real examples for smart mortgage decisions.
How Is Principal Calculated On A Mortgage
Learn about how is principal calculated on a mortgage. Expert tips and real examples for smart mortgage decisions.
How Much Faster Can I Pay Off My Mortgage Calculator
Learn about how much faster can i pay off my mortgage calculator. Expert tips and real examples for smart mortgage decisions.