Loan Payment Calculator

Q: How is the monthly payment calculated?

It uses the standard amortization formula M = P·i·(1+i)^N / ((1+i)^N − 1), where P is the loan amount, i the monthly rate and N the number of months. Every month you pay the same amount; interest is charged on the remaining balance and the rest pays down principal.

Q: Does a longer term mean a smaller payment but more interest?

Yes. A longer amortizing term generally lowers the scheduled monthly principal-and-interest payment but increases total interest paid over the life of the loan. The exact difference depends on the loan amount, rate, term, fees and lender rules.

The other side of the ledger. See the equal monthly payment, total interest and total cost of any loan — and how much of each payment is principal versus interest over time.

Borrowing $500,000 at 5% for 30 years means a monthly payment of about $2,684, a total cost of roughly $966,280, and about $466,280 in interest. The earlier you pay down principal, the less interest you pay overall. This calculator shows your equal monthly payment, total interest, total cost, and an amortization breakdown year by year. Adjust the loan amount, rate or term below to compare options and see the impact of extra repayments.

Your loan

Calculations run in your browser. Inputs are not stored.

Loan amount

Annual interest rate

Illustrative rate scenarios only — not current lender quotes.

Loan term

30 years

This calculator models a fully amortizing loan with monthly principal-and-interest payments and a monthly periodic rate (annual rate ÷ 12). Actual lender conventions, fees and payment structures can differ by country and product.

Source & scope: CFPB explains that amortizing loans allocate payments between principal and interest, with more generally going to interest early in the term; longer terms can reduce monthly payments while increasing lifetime interest. CFPB amortization guide. Calculator results exclude taxes, insurance and lender fees unless explicitly entered elsewhere.

Monthly payment for $500,000 over 30 years

$2,684/mo

Principal (loan amount)$500,000

Total interest$466,279

Total you'd repay$966,279

Principal paidInterest paid

Show yearly breakdown

Year	Remaining balance	Principal paid	Interest paid

How this calculation works

The formula

This is the standard equal-installment (amortizing) loan. With loan amount P, monthly rate i and N months, the monthly payment is:

M = P · i · (1+i)^N / ( (1+i)^N − 1 )

Each month you pay interest on the remaining balance, and the rest reduces principal. Early payments are mostly interest; later payments are mostly principal.

Assumptions

The interest rate is fixed for the whole term (equal installments, principal + interest).
Payments are made at the end of each month.
Loans are amortized monthly — the rate is applied as a monthly periodic rate (annual ÷ 12), the standard fixed-rate mortgage convention. Actual lender conventions may differ by country and loan product.
Fees, taxes, insurance and other charges are not included.
The result is in nominal dollars — inflation is not modeled.

View the formula →

Educational purposes only. Not financial advice. See the full methodology and disclaimer.

Worked examples

See how interest rates and loan terms shape your monthly payment and total cost. All examples use standard amortization (equal monthly payments).

Example 1: A $300,000 mortgage at 6.5% for 30 years

Monthly payment

$1,896

Total paid over 30 years

$682,633

Total interest

$382,633

A $300,000 home loan at 6.5% for 30 years costs $1,896 per month. But here's the number that surprises most people: over 30 years, you'll pay $682,633 total — more than double the original loan amount. The interest alone is $382,633, which is 127% of the principal. In the early years, most of your payment goes to interest, not principal. This is why making extra payments early in the loan saves so much money — every extra dollar reduces the principal that future interest is calculated on.

Example 2: How 1.5% changes everything

Same $300,000 loan, 30-year term · different interest rates

5.0% rate

$1,610/mo

$279,767 interest

6.5% rate

$1,896/mo

$382,633 interest

8.0% rate

$2,201/mo

$492,466 interest

A 1.5-percentage-point difference in your mortgage rate doesn't sound like much — but over 30 years, it's massive. Going from 5% to 6.5% adds $286 per month and $102,866 in total interest. Going from 5% to 8% adds $591/month and $212,699 in interest. This is why: (1) shopping around for the best mortgage rate can save you six figures, (2) improving your credit score before applying can qualify you for a lower rate, and (3) refinancing when rates drop can be worth the closing costs. On a $300k loan, even a 0.5% rate reduction saves about $35,000 over 30 years.

Example 3: 15-year vs 30-year mortgage

Same $300,000 loan at 6.5% · different loan terms

15-year mortgage

$2,613/mo

Total interest: $170,398

30-year mortgage

$1,896/mo

Total interest: $382,633

A 15-year mortgage has a higher monthly payment ($2,613 vs $1,896 — $717 more per month), but it saves you $212,235 in total interest. That's because: (1) you're paying down principal faster, so there's less balance for interest to accrue on, and (2) 15-year mortgages typically have lower interest rates than 30-year ones (often 0.5–0.75% lower). The question is whether you can afford the higher monthly payment while still maintaining an emergency fund and investing for retirement. If you can, a 15-year mortgage is one of the best financial decisions you can make — it's like a forced savings plan that pays a guaranteed 6.5% return (the interest you avoid paying).

All examples assume standard amortization with fixed interest rates, no extra payments, and no fees, taxes, or insurance. Actual loan terms may vary. See full disclaimer.

Loans, explained

How is the monthly payment calculated?

It uses the standard amortization formula M = P·i·(1+i)^N / ((1+i)^N − 1), where P is the loan amount, i the monthly rate and N the number of months. Every month you pay the same amount; interest is charged on the remaining balance and the rest pays down principal.

Why is most of my early payment interest?

Each month's interest is charged on the remaining balance, which is largest at the start. As you pay down principal, the interest portion shrinks and more of your fixed payment goes to principal. The yearly breakdown shows this shift clearly.

Are fees, taxes and insurance included?

No. This is the pure principal-plus-interest payment. Real loans often add property tax, insurance, or fees — add those separately to find your true monthly cost.

Does a longer term mean a smaller payment but more interest?

Yes — and the effect can be dramatic. Stretching a $500,000 loan at 5% from 20 to 30 years lowers the monthly payment but roughly doubles total interest. Use the slider to compare terms before you commit.

Should I make extra payments on my loan?

If you have high-interest debt (credit cards, personal loans above 7%), pay those off first — the guaranteed return from avoiding 20% credit card interest beats almost any investment. For a mortgage at 6–7%, extra payments are a solid choice: every extra dollar reduces principal, saving you future interest. On a $300k, 6.5%, 30-year mortgage, paying an extra $200/month saves about $67,000 in interest and pays off the loan 5 years early. But consider: (1) do you have a 3–6 month emergency fund? (2) are you getting your full employer 401k match? (3) could you earn a higher return investing the extra money? If your mortgage rate is 3–4%, investing in a low-cost index fund (using an illustrative nominal return scenario) could do better, but its return is uncertain. At 6–7%, the math is closer.

When does refinancing make sense?

The general rule of thumb: refinance if you can lower your rate by 0.75–1.0 percentage points and plan to stay in the home long enough to recoup the closing costs (typically 2–5 years). For example: on a $300k mortgage at 6.5%, refinancing to 5.5% saves $194/month. If closing costs are $4,000, you break even in about 21 months. After that, you're saving pure money. But also consider: (1) are you resetting the loan term? Refinancing from a 30-year to another 30-year when you've already paid 5 years can increase total interest. Consider a 25-year or 20-year refinance instead. (2) has your credit score improved? A higher score may qualify you for a better rate. (3) are you pulling cash out? Cash-out refinancing often has higher rates and increases your loan balance — only do it for high-return purposes (home improvements, paying high-interest debt), not for consumption.