How to Calculate Your Mortgage Payment
To calculate your monthly mortgage payment, you need these values:
- P = Principal (loan amount)
- r = Monthly interest rate (annual rate divided by 12)
- n = Number of payments (term in years × 12)
The formula for a fixed-rate mortgage is:
Monthly Payment = P × [r(1 + r)^n] / [(1 + r)^n - 1]
Example Calculation
For a $300,000 loan at 4.5% interest for 30 years:
| Loan Amount | Interest Rate | Term | Monthly Payment |
|---|---|---|---|
| $300,000 | 4.5% | 30 years | $1,520.06 |
Amortization Schedule (First 5 Months)
| Month | Payment | Principal | Interest | Remaining Balance |
|---|---|---|---|---|
| 1 | $1,520.06 | $395.06 | $1,125.00 | $299,604.94 |
| 2 | $1,520.06 | $396.54 | $1,123.52 | $299,208.40 |
| 3 | $1,520.06 | $398.02 | $1,122.04 | $298,810.38 |
| 4 | $1,520.06 | $399.52 | $1,120.54 | $298,410.86 |
| 5 | $1,520.06 | $401.01 | $1,119.04 | $298,009.85 |