Loan Payment Calculator

The standard formula is M = P × [r(1+r)^n] / [(1+r)^n - 1], where M is the monthly payment, P is the loan amount, r is the monthly interest rate (annual rate ÷ 12), and n is the total number of payments.

An amortization schedule shows each monthly payment broken down into principal and interest. In the early years, most of your payment goes toward interest. Over time, a larger portion goes toward principal as the balance decreases.

Even small extra payments can save thousands. On a $300,000 mortgage at 6.5%, paying an extra $200 per month saves over $80,000 in interest and pays off the loan about 6 years early.

A 15-year mortgage has higher monthly payments but much lower total interest. For example, a $300K loan at 6.5% costs about $382K in interest over 30 years, but only about $165K over 15 years — saving over $217K.

Three factors determine your payment: the loan amount (principal), the interest rate, and the loan term. A larger loan, higher rate, or shorter term all increase your monthly payment.

A longer term reduces monthly payments but significantly increases total interest paid. Choose the shortest term you can comfortably afford. You can also choose a longer term but make extra payments when possible.

It's the total interest paid divided by the original loan amount, expressed as a percentage. A 30-year mortgage at 6.5% has a ratio over 125%, meaning you pay more in interest than the original loan amount.

Use the affordability calculator to find out. Financial advisors typically recommend keeping your housing costs (mortgage + taxes + insurance) below 28% of your gross monthly income.