How to calculate a monthly mortgage payment
Calculate principal-and-interest payments from the loan amount, annual rate and term.
Calculate a mortgage from the amount financed, not necessarily the property price. A $2,500,000 home with a $500,000 down payment leaves a $2,000,000 loan.
For a level-payment mortgage:
payment = P x [r(1 + r)^n] / [(1 + r)^n - 1]P is principal, r the monthly rate and n the number of payments. A 9% nominal annual rate gives 0.09 / 12 = 0.0075 monthly.
For $2,000,000 at 9% over 20 years (240 months), the estimated principal-and-interest payment is $17,994.52. Scheduled payments total about $4,318,684.59, including $2,318,684.59 in interest.
This base payment excludes insurance, taxes, fees, association charges and purchase costs. Use the mortgage calculator and compare its result with the lender’s formal disclosure.