How Is a Mortgage Payment Calculated?
Your monthly mortgage payment uses the standard amortization formula: M = P[r(1+r)^n] / [(1+r)^n - 1]. P is your loan amount, r is the monthly interest rate, and n is the total number of payments. Early payments go mostly to interest; later payments shift toward principal.
A complete PITI payment includes Principal, Interest, property Taxes, and Insurance. This calculator lets you add annual property tax and insurance to see your true monthly cost.
2026 US Mortgage Rate Outlook
30-year fixed mortgage rates in 2026 are generally in the 6.0–7.0% range depending on credit score, down payment, and lender. A 15-year mortgage typically carries a rate 0.5–0.75% lower, but with significantly higher monthly payments.
Frequently Asked Questions
How is my monthly mortgage payment calculated? +
Your monthly payment uses the standard amortization formula based on loan amount, annual interest rate, and term. This calculator also adds property tax and insurance to show your true total monthly cost (PITI — Principal, Interest, Taxes, Insurance). Early payments are mostly interest; later payments are mostly principal.
Should I choose a 15-year or 30-year mortgage? +
A 15-year mortgage has higher monthly payments (typically 25–35% more) but you pay significantly less total interest — often $150,000–$300,000 less on a larger loan. A 30-year has lower required payments and more cash flow flexibility, but you pay more overall. If the 15-year payment is comfortably within budget and you plan to stay long-term, it's usually the better financial choice.
What is PMI and when do I need it? +
Private Mortgage Insurance (PMI) is required when your down payment is less than 20%. It typically costs 0.5–1.5% of the loan amount annually — roughly $100–$250/month on a $300,000 loan. Once you reach 20% equity (through payments or appreciation) you can request removal. FHA loans have their own mortgage insurance premium (MIP) which works differently and may not drop off automatically.
How much house can I afford? +
The standard guideline is the 28/36 rule: your monthly housing costs should not exceed 28% of gross monthly income, and total monthly debt payments should not exceed 36%. On a $90,000 salary, that means keeping housing costs under $2,100/month. See our
Affordability Calculator for a full salary-by-salary breakdown.
What mortgage rate should I expect in 2026? +
30-year fixed mortgage rates in mid-2026 are running approximately 6.3–6.9% for well-qualified borrowers with 20% down and 760+ credit scores. Rates increase with lower credit scores, higher loan-to-value ratios, and investment property purchases. To see your actual rate, get pre-qualified with 2–3 lenders — even a 0.25% rate difference saves thousands over the life of a loan.
Does making extra payments save money? +
Significantly. On a $350,000 30-year mortgage at 6.5%, paying an extra $200/month saves approximately $68,000 in interest and cuts nearly 5 years off the loan. Use the "Extra Payment" field in the calculator above to model your exact savings. Any extra payment goes directly toward principal — there's no penalty for overpaying on standard mortgages.