How to Calculate Mortgage Payments
A clear, U.S.-focused walkthrough using the standard amortization formula plus taxes, insurance, and PMI.
1. Know the core formula
Monthly P&I = P · [ r(1 + r)n / ((1 + r)n - 1) ], where P = loan amount, r = monthly rate, n = total payments.
2. Add the real housing costs
- Property taxes ÷ 12
- Homeowners insurance ÷ 12
- PMI until loan-to-value is near 78%
- HOA dues and other monthly costs
3. Example
$350,000 price, 15% down → $297,500 loan, 6.25%, 30 years. P&I ≈ $1,830. Add $320 taxes + $95 insurance + $70 PMI + $60 HOA = $2,375 total.
4. Check debt-to-income (DTI)
Lenders want housing ≤28% of gross income and total debt ≤36–43%. If the total payment breaks that, adjust price or down payment.
FAQ
- Do biweekly payments change the formula? The formula assumes monthly; biweekly effectively makes 13 payments/year, shortening payoff.
- Should I include escrow? Yes—taxes and insurance usually sit in escrow and belong in your monthly estimate.
- Is PMI tax-deductible? Sometimes; check current IRS rules or a tax pro.
This guide is educational; verify numbers with your lender.
Run the numbers instantly in our mortgage calculator or deep-dive with the PITI version.