Mortgage hub: monthly payments, interest, affordability and equity
A fixed-rate mortgage payment depends on three inputs: the loan amount, the annual interest rate and the number of monthly payments. From there you can see how much of each payment is interest, how much house fits your budget, and how much equity you own. This hub links the formulas, our Mortgage FAQ and the calculators that do the math.
Start hereUse the free Mortgage CalculatorEstimate the monthly principal, interest, tax, insurance, PMI and HOA cost of a home loan.Quick checklist
- Loan amount (P) = purchase price − down payment; monthly rate (r) = annual rate ÷ 12 as a decimal; payments (n) = years × 12.
- Monthly principal and interest M = P × r(1 + r)^n ÷ [(1 + r)^n − 1]; add escrowed property tax, homeowners insurance, mortgage insurance and HOA dues from your Loan Estimate for the full payment.
- Interest for a month = remaining balance × r; total interest over the loan = (M × n) − P.
- Compare loans using the APR on each Loan Estimate, which includes certain fees as well as the interest rate.
- Home equity = current market value − outstanding mortgage balances; loan-to-value = balance ÷ value.
Sources: CFPB — Loan Estimate explainer (loan terms, projected payments, APR); CFPB — What is the difference between a loan interest rate and the APR?
Worked formulas: how to calculate monthly mortgage payments, interest and amortization · home buying calculator
Calculators for mortgage projects
- Mortgage CalculatorEstimate the monthly principal, interest, tax, insurance, PMI and HOA cost of a home loan.
- Home Affordability CalculatorEstimate the home price your income, debts and down payment could support using DTI limits.
- Home Equity CalculatorCurrent equity, loan-to-value and how much you could borrow against your home.
- Refinance CalculatorCompare your current loan with a new one and estimate monthly savings and break-even point.
In-depth guides
- How Mortgage Payments Are Calculated
Your principal-and-interest payment is calculated with the standard loan amortization formula: M = P x [r(1+r)^n] / [(1+r)^n - 1]. For a $400,000 loan at 6.5% over 30 years, that works out to about $2,528 a month before taxes, insurance or PMI are added.
Common questions
- How do I calculate a monthly mortgage payment?
- M = P × r(1 + r)^n ÷ [(1 + r)^n − 1], with P the loan amount, r the annual rate ÷ 12 and n the number of monthly payments. $320,000 at 6.5% for 30 years ≈ $2,022.62 principal and interest.
- How do I calculate one month's interest?
- Current balance × annual rate ÷ 12. On $320,000 at 6.5%, the first month's interest is about $1,733.33.
- How is home equity calculated?
- Current market value minus all loan balances secured by the home.
Not sure which tool fits your project? Describe it to the Project Advisor.