Guide
How to Calculate Your Mortgage Payment Manually
February 5, 202510 min read
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
- P = Principal (loan amount)
- r = Monthly interest rate (annual rate ÷ 12 ÷ 100)
- n = Total number of payments (years × 12)
Example Calculation
For a $400,000 home with 20% down ($80,000), 6.5% interest rate, 30-year term:
- P = $320,000
- r = 6.5 / 12 / 100 = 0.00542
- n = 30 × 12 = 360
- M = $320,000 × [0.00542(1.00542)^360] / [(1.00542)^360 - 1]
- M ≈ $2,023 per month (principal and interest only)
Beyond Principal & Interest
Your actual monthly payment typically includes:
- Property taxes: Usually 1-2% of home value per year
- Homeowner's insurance: Typically $100-300/month
- PMI: Required if down payment is under 20%, usually 0.5-1% of loan per year
- HOA fees: If applicable, varies widely
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