Quick Answer: A fixed-rate mortgage payment for principal and interest is not “loan divided by months.” Early payments are mostly interest. The formula levels the total P&I so it stays constant while the mix shifts toward principal.
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A fixed-rate mortgage payment for principal and interest is not “loan divided by months.” Early payments are mostly interest. The formula levels the total P&I so it stays constant while the mix shifts toward principal.
The P&I formula
M = P × [r(1+r)^n] / [(1+r)^n − 1]. P is the loan, r is annual rate/12, n is the number of payments. For $280,000 at 6.5% for 30 years, r = 0.065/12, n = 360, M ≈ $1,770. We use this in every conventional calculator on this site. Details: methodology.
Then add escrow and insurance products
Monthly tax = price × tax rate / 12. Monthly homeowners insurance = price × insurance rate / 12. PMI depends on LTV bands in our model. FHA adds MIP; VA may add a financed funding fee and no PMI.
Worked example
$350,000 price, $70,000 down, $280,000 loan, 6.5%, 360 payments. P&I ≈ $1,770. Tax 1.2% ≈ $350. Insurance 0.35% ≈ $102. PMI $0. Total ≈ $2,222. Change the rate in the calculator at the top to see M move. Educational only.
Mortgage Calculator editorial team
Organization byline. Pages are editorially reviewed; we do not invent CFA/CFP credentials or user-count testimonials. Formulas are documented on the methodology page.
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