Personal Finance · 5 min read
How to Calculate a Mortgage Payment
Level monthly installments on a long-term home loan — and what they omit
A mortgage is a long-term amortizing loan secured by property. This tutorial walks through the standard annuity formula, a $350,000 / 6.75% / 30-year monthly worked example, and a playground that breaks one payment into principal versus interest. Figures are illustrative; fees and taxes are omitted.
Written by the My Calculator Stack editorial team. About our methods
These figures are illustrative. Origination fees, points, insurance, and taxes are omitted. This is not lending, tax, or financial advice.
1.What a mortgage payment is
A fixed-rate mortgage charges interest on the remaining balance and applies the rest of each payment to principal. Early payments are mostly interest; later payments are mostly principal. The installment stays level when the rate and schedule are fixed. Property taxes, homeowners insurance, PMI, points, and origination fees are not in this formula — they sit on top of the principal-and-interest payment if a lender or escrow requires them.
2.The formula
Payment uses the standard annuity formula. Period rate i = annual rate / m, and N = years × m is the number of payments. Then p = P · i(1+i)^N / ((1+i)^N − 1). If i = 0, p is simply P/N. Monthly mortgages use m = 12. Total paid is p × N; total interest is that total minus principal. The same equation powers the mortgage calculator on this site.
\[ p = P\frac{i(1+i)^{N}}{(1+i)^{N}-1} \]
3.Worked example
Take a $350,000 loan at 6.75% annual for 30 years with monthly payments — the same defaults as the mortgage calculator. Period rate i = 0.0675/12, and N = 360. The annuity formula gives p ≈ $2,270.09 per month. Total paid ≈ $817,234; interest is the remainder after subtracting principal, about $467,234. The first payment is about $1,968.75 interest and $301.34 principal — most of an early installment services interest, not the house.
\[ p = 350000\frac{i(1+i)^{360}}{(1+i)^{360}-1}\approx 2270.09 \]
4.First-payment breakdown
Move principal, rate, and term to see the monthly payment update and the first installment split into interest versus principal. This is a teaching widget — one payment’s mix, not a period-by-period amortization table, no escrow, no extra fees, no full calculator chrome. Open the mortgage calculator for payment, totals, and a full schedule.
Inline playground
Monthly payments · fees and taxes omitted
Payment per month
$2,270.09
First payment: interest $1,968.75 · principal $301.34
Lifetime: total paid $817,233.60 · interest $467,233.60
i = 0.0675/12, N = 360 → p ≈ 2270.09
Illustrative only — level monthly principal and interest, no points, insurance, or taxes.
Open the full mortgage calculator →5.Open the full calculator
The mortgage calculator uses the same annuity formula, the same $350,000 / 6.75% / 30-year monthly example, and the same limitation that fees and taxes are omitted. Browse other personal finance tools if you need a generic loan payment, an amortization schedule, or compound interest next.
Try it yourself
Open the related calculator and put these formulas to work.