How to Calculate Your Mortgage Payment
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Understanding your mortgage payment is the first step in homebuying. Your monthly payment includes principal, interest, taxes, and insurance (PITI).
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Step-by-Step Guide
- Know your loan amount (home price minus down payment)
- Determine your annual interest rate and divide by 12
- Use the formula: M = P [ r(1+r)^n ] / [ (1+r)^n - 1 ]
- Add property taxes and insurance for your total payment
- Each month, more goes to principal and less to interest (amortization)
Frequently Asked Questions
What is a good mortgage payment?
Your mortgage should not exceed 28% of your gross monthly income.
How much house can I afford?
Total housing costs should stay under 30% of gross income.
Does credit score affect payment?
Higher scores get lower rates, saving tens of thousands over the loan.
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