Monthly mortgage payment = P × [r(1+r)^n] ÷ [(1+r)^n − 1], where P = principal, r = monthly rate, n = total payments. On a $400,000 loan at 6.8% APR for 30 years, the payment is $2,612/month. Total interest paid over 30 years is $540,320 — more than the original loan amount.
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20% down = $80,000 on a $400,000 home. Under 20% typically requires PMI.
30-yr fixed national avg (Sep 2026): ~6.8%. 15-yr: ~6.1%.
US avg ~1.1%. TX ~1.8%, NJ ~2.2%, HI ~0.3%.
Typically 0.5%–1.5% of loan/yr. Auto-estimated if down payment is under 20%.
How to Calculate a Mortgage Payment (2026)
The standard formula for monthly principal and interest is: M = P[r(1+r)^n] / [(1+r)^n - 1]
- P = loan principal (home price minus down payment)
- r = monthly interest rate (annual rate / 12)
- n = total number of payments (term in years x 12)
- Payroll Taxes Guide
- Overtime Rules
- Tax Withholding Guide
Example: $320,000 loan at 6.85% for 30 years. Monthly rate = 0.0685/12 = 0.005708. n = 360. M = $2,099/month (P+I only).
What is PITI?
PITI stands for Principal, Interest, Taxes, and Insurance. Lenders use this full monthly figure to calculate your debt-to-income ratio. Always budget for the PITI payment, not just P+I.
The 28% Rule
Lenders generally require your monthly PITI payment to be no more than 28% of gross monthly income. At $80,000/year ($6,667/month), that means a max payment of $1,867/month.
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