Mortgage Payment Calculator
Your Estimated Monthly Mortgage Payment:
$0.00
Understanding Your Mortgage Payment
A mortgage is a loan used to purchase a home. The monthly payment for a mortgage is typically composed of four main parts, often referred to as PITI:
- Principal: The amount borrowed to buy the property. Each principal payment reduces your outstanding loan balance.
- Interest: The cost of borrowing the money. This is calculated based on your interest rate and the remaining loan balance.
- Taxes: Property taxes levied by local governments. These are usually collected by the lender and paid on your behalf.
- Insurance: Homeowner's insurance, which protects against damage to your property, and often Private Mortgage Insurance (PMI) if your down payment is less than 20%. These are also typically collected by the lender.
This calculator focuses on the Principal and Interest (P&I) portion of your monthly payment, which is the core of your loan repayment. To calculate the P&I payment, we use the following formula:
M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1]
Where:
- M is your monthly payment
- P is your principal loan amount
- i is your monthly interest rate (annual rate divided by 12)
- n is the total number of payments over the loan's lifetime (loan term in years multiplied by 12)
Example:
Let's say you're taking out a mortgage for $300,000 with an annual interest rate of 5% over 30 years.
- Principal (P) = $300,000
- Annual Interest Rate = 5%, so Monthly Interest Rate (i) = 5% / 12 = 0.00416667
- Loan Term = 30 years, so Number of Payments (n) = 30 * 12 = 360
Plugging these values into the formula would give you an estimated monthly P&I payment of approximately $1,610.46. Remember that your total monthly housing expense will be higher due to the inclusion of property taxes and insurance.
Using this calculator can help you estimate your P&I payments and better plan for your homeownership journey.