How a fixed-rate mortgage payment works
Payment = P × r ÷ (1 − (1 + r)−n)
P is the loan principal, r is the annual interest rate divided by 1,200, and n is the number of monthly payments. At a 0% interest rate the payment is simply principal divided by n.
The principal-and-interest payment stays constant. As the balance falls, less goes to interest and more goes to principal. The schedule below the calculator reports cumulative principal and interest at each year end.
What is excluded?
The estimated housing payment adds property taxes, insurance and HOA dues to principal and interest. It does not include PMI, origination fees, points, balloon payments or adjustable rates. Actual escrow payments and lender rounding may differ.
Learn more about mortgage amortization from the CFPB.