How to Calculate a Mortgage Payment (With a Free Calculator)
Want to know your monthly mortgage payment and total interest before you commit? Here's how amortization works in plain English, how the rate and term change what you pay, and a free loan calculator to run the numbers.
Before taking on a mortgage (or any big loan), it pays to know your monthly payment and total interest up front — the numbers can surprise you. Here's how mortgage maths works in plain English, with a calculator to do it for you.
How a mortgage payment works
Most mortgages use amortization — equal monthly payments for the life of the loan. The formula:
payment = principal × monthly rate ÷ (1 − (1 + monthly rate)^−n)
monthly rate = annual rate ÷ 12
n = years × 12
Each payment is part interest, part principal. Early on, most of it is interest; later, most is principal — which is why paying extra early saves a lot of interest.
Don't want to do the algebra? Use our loan / mortgage calculator — enter the amount, annual rate and term to get the monthly payment, total interest and total repaid instantly.
Rate and term change everything
Two levers move your numbers the most:
- Interest rate: higher rate → higher monthly payment and more total interest. Even a 0.5% difference adds up to a large sum over 20–30 years.
- Term: longer term → lower monthly payment but more total interest (you pay for longer); shorter term → higher monthly payment but less total interest.
A smart move: run your real rate, then run it again 0.5% higher, to see how sensitive your budget is.
A worked example
On a loan with a fixed rate over a set term, the calculator shows three numbers that matter:
- Monthly payment — what leaves your account each month
- Total interest — the true cost of borrowing
- Total repaid — principal + interest over the whole term
Comparing total interest across different terms is eye-opening — a longer term feels easier monthly but can cost dramatically more overall.
Important caveats
A standard calculator assumes a fixed rate and excludes grace periods, fees, insurance and rate adjustments — so it's for planning, not a quote. Your lender's approved figure is final. Use the estimate to compare scenarios before you talk to banks.
The bottom line
A mortgage payment is amortization: payment depends on principal, rate and term, with interest front-loaded. Rate and term are the big levers — higher rate or longer term means more total interest. Run your numbers (and a slightly higher rate) with the loan calculator to plan with eyes open, remembering it's an estimate, not your bank's final figure. The same tool works for car and personal loans too.
FAQ
How is a monthly mortgage payment calculated?
Most mortgages use amortization (equal monthly payments). The formula is: payment = principal × monthly rate ÷ (1 − (1 + monthly rate)^−number of payments), where the monthly rate is the annual rate ÷ 12 and the number of payments is years × 12. Each payment covers interest plus some principal; early on most goes to interest, later most goes to principal. A calculator does this instantly.
How much do the interest rate and term change my payment?
A lot. A higher rate raises both the monthly payment and the total interest; a longer term lowers the monthly payment but increases total interest (you pay for longer). For example, on the same loan, even a 0.5% rate difference can change total interest by a large amount over 20–30 years. Run both your real rate and a slightly higher one to see the sensitivity.
Will the calculator match my bank exactly?
Roughly, not exactly. A standard calculator assumes a fixed rate and excludes grace periods, fees, insurance and rate adjustments, so treat it as planning. Your bank's approved figure is final and may differ. Use the estimate to compare scenarios (different amounts, rates, terms) before you talk to lenders.
Can I use it for car or personal loans too?
Yes. Any amortized loan works the same way — just enter the loan amount, the annual interest rate and the term in years, and you'll get the monthly payment, total interest and total repaid. So the same calculator covers mortgages, car loans and personal loans.