How is a mortgage payment calculated?

The principal-and-interest portion uses the standard amortization formula based on loan amount, interest rate, and term. Property tax, home insurance, and any HOA fees are added on top to get the full monthly cost.

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Estimate your monthly payment including property tax and insurance, and see exactly how much interest you'll pay over the life of the loan.

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Principal & interest

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Year	Principal paid	Interest paid	Remaining balance

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How your payment is calculated

The principal-and-interest part of your payment comes from the standard amortization formula:

M = L × [ r(1+r)ⁿ ] / [ (1+r)ⁿ − 1 ]

where L is the loan amount, r the monthly interest rate, and n the number of monthly payments. Property tax and insurance are divided by 12 and added on top. Early payments are mostly interest; the balance shifts toward principal over time, which the schedule above shows year by year.

Frequently asked questions

How much house can I afford?

A common guideline: keep housing costs below 28% of gross monthly income and total debt payments below 36%. Lenders also weigh credit score, down payment, and debt-to-income ratio.

Does paying extra principal help?

Yes - extra principal shortens the loan and cuts total interest. Try the loan payoff calculator to see the effect of extra payments.

What about PMI?

If your down payment is under 20%, lenders typically add private mortgage insurance of roughly 0.3-1.5% of the loan per year until you reach 20% equity. Add it to the insurance field for a fuller estimate.