Quick example
A $250,000 loan at 6.5% for 30 years
The estimated principal-and-interest payment is $1,580.17 per month. Across 360 scheduled payments, the unrounded calculation totals $568,861.22, including $318,861.22 in interest.
Payment math
How the monthly payment is calculated
For a positive interest rate, the fixed-rate amortization formula is:
M = P × r ÷ (1 − (1 + r)^(-N))
Pis the loan principal: the amount being financed.ris the monthly decimal rate: annual interest rate (%) divided by 100, then by 12.Nis the number of monthly payments: years multiplied by 12.Mis the monthly principal-and-interest payment.
The formula spreads repayment across the term. Each month, interest is calculated on the remaining balance; the rest of the payment reduces the principal.
At zero interest
Use M = P ÷ N instead. A $12,000 loan over 12 months at 0% has a payment of $1,000.00 and no interest. There is no need to divide by a zero interest rate.
Choose the right rate
Interest rate is not the same as APR
Use the annual interest rate stated in your loan terms. A disclosed APR can also reflect fees and other borrowing costs, so it is not a substitute for the rate used to calculate principal-and-interest payments. This tool does not calculate APR or infer an interest rate from it.
For mortgages, the Consumer Financial Protection Bureau explains the difference between interest rate and APR and where to find each on a Loan Estimate.
Calculation assumptions
What this payment includes
Fixed interest rate
The annual interest rate remains unchanged for the full term and is divided into monthly periods.
Fully amortizing
Scheduled payments reduce the balance to zero at the end of the term.
Monthly schedule
Payments occur once per month with no extra payments or skipped months.
Principal and interest
No separate allowance is added for taxes, insurance, fees, or penalties. Costs already financed into the entered loan amount are part of the principal.
Estimate only
Lender figures can differ
Lenders may use payment rounding, daily interest, fees, points, escrow, or different timing conventions. Review the lender's disclosures before making a borrowing decision. This calculator is educational, not financial advice.
Common questions
Loan payment FAQ
How is a monthly loan payment calculated?
The fixed-rate amortization formula uses the loan principal, monthly interest rate, and number of monthly payments to calculate a level principal-and-interest payment.
Should I enter the interest rate or APR?
Enter the annual interest rate from your loan terms. Do not substitute a fee-inclusive APR: this calculator does not convert APR into the loan's interest rate.
Does the payment include taxes, insurance, or fees?
The result covers principal and interest only. It does not separately add taxes, insurance, or fees; costs already financed into the entered loan amount are part of that principal.
What happens when the interest rate is zero?
The loan amount is divided evenly by the number of monthly payments, with zero total interest.