How Mortgage Payments Are Calculated

Learn the standard amortization formula, what principal, interest, taxes, and insurance mean, and how term and rate affect payment.

The formula

M = P × r × (1+r)^n / ((1+r)^n − 1), where P is principal, r is monthly rate, n is total payments.

Example

P=$350,000, APR=6.25% → r=0.0625/12, n=360 → M≈$2,155 (principal & interest only).

What changes payments

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