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Assurance Financial Blog

How Do You Calculate Your Estimated Mortgage Payment

You make better decisions when you fully understand your mortgage. Taking some time to crunch the numbers can help you develop an accurate assessment of your loan situation and always pays off in the long run. Below we’ve mapped out how to calculate your estimated mortgage payment and highlighted a few details to pay attention to during the process.  

The details you need to get started.

To begin calculating your estimated mortgage payment, gather the following information about the potential mortgage loan:

–    Your monthly income

–    The market value of the home

–    The loan amount

–    The type of loan

–    The interest rate on the loan

–    The number of years you have to repay

–    The loan amount

Fixed rate loan calculation.

The type of calculation you’ll use will depend on the category that your loan falls under. The majority of home loans are fixed-rate loans. The formula for those loans are:

Loan Payment=Amount/Discount Factor

Before you begin, you’ll need to calculate the discount factor using the following formula:

–    Number of periodic payments (n) = payments per year times number of years

–    Periodic Interest Rate (i) = annual rate divided by the number of payments per

–    Discount factor (D) = {[(1 + i) ^n] – 1} / [i(1 + i)^n]

After you’re finished, you can double check your math with Assurance Financial’s Mortgage Calculator Tool.

Interest loan payment calculation.

Interest-only loan estimates are far less complicated to calculate. With each payment, you aren’t actually paying down the loan. The formula for an interest-only loan is:

Loan Payment = Amount x (Interest Rate/12)


P=A x I

Your payment amount will stay the same until you make an additional payment, after a certain period when you’re required to make an amortizing payment, or you pay off the entire loan.

We’d love to help!

Still confused about the how to calculate your estimated mortgage payment? Contact Assurance Financial today or check out our Mortgage Calculator Tool. Our team of loan officers are dedicated to making the loan process as easy as possible for you. Click here for more information about our loan process.

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