mortgage
Mortgage Payment
A mortgage payment is the fixed monthly amount owed to a lender, covering principal and interest (P&I). It may also include escrow for property tax and homeowners insurance (PITI).
Formula
M = P × r(1+r)ⁿ / ((1+r)ⁿ − 1) The standard mortgage payment formula calculates the fixed monthly amount needed to fully repay a loan over a set term at a fixed interest rate. The payment stays the same every month, but the interest/principal split changes as the balance falls.
PITI — Principal, Interest, Taxes, Insurance — is the total monthly housing cost most lenders use for affordability calculations. Our mortgage calculator covers P&I only; property tax and insurance vary widely by location.
Put this into practice with our free calculator:
Open calculator →Related terms
- Amortization
- Amortization is the process of paying off a loan through scheduled, equal payments that cover both principal and interest. Early payments are mostly interest; later payments are mostly principal.
- Principal
- The principal is the original amount borrowed on a loan, or the outstanding balance still owed — excluding interest. On a mortgage, principal is the portion of each payment that reduces the loan balance.
- Debt-to-Income Ratio (DTI)
- The debt-to-income (DTI) ratio is your monthly debt payments divided by your gross monthly income, expressed as a percentage. Most lenders require a DTI below 43% to qualify for a mortgage.
Frequently asked questions
What is Mortgage Payment?
A mortgage payment is the fixed monthly amount owed to a lender, covering principal and interest (P&I). It may also include escrow for property tax and homeowners insurance (PITI).
What is the Mortgage Payment formula?
The formula is: M = P × r(1+r)ⁿ / ((1+r)ⁿ − 1)