Mortgage Calculator · Guide
How Mortgage Payments Are Calculated
A fixed-rate mortgage payment starts with the loan principal, monthly interest rate, and number of scheduled payments.
Loan amount
Loan amount equals Home price minus Down payment. A 20% down payment on a $400,000 home is $80,000, leaving a $320,000 starting loan balance.
Principal and interest formula
For a positive monthly rate r, principal P, and n payments, the app uses P × [r(1+r)^n] / [(1+r)^n - 1]. With a 0% rate, payment is simply principal divided by the payment count.
Payment breakdown
Principal and interest are calculated from the loan. Property tax and homeowners insurance are divided by 12 from annual amounts you enter. HOA and mortgage insurance use the monthly amounts you enter. The calculator does not infer local tax rates, insurance prices, or mortgage-insurance eligibility.
Worked example
A $320,000 loan at 6.5% for 360 months produces about $2,022.62 of monthly principal and interest. Adding $500/month of property tax and $150/month of homeowners insurance produces an estimated $2,672.62 monthly housing payment before HOA or mortgage insurance.
What the formula does not include
The fixed payment formula does not itself include taxes, insurance, HOA dues, mortgage insurance, closing costs, APR, points, ARM changes, penalties, or lender underwriting. Those are separate from the mathematical principal-and-interest calculation.