How to Calculate Your Mortgage Payment in 2025 (Step-by-Step)
Updated: October 2025 • Reading time: 8 minutes
How to calculate your mortgage payment is easier than it seems. In 2025, you can quickly find your monthly cost using a simple formula or an online calculator that includes property taxes, insurance, and PMI. This guide breaks it down step-by-step.
1. How to calculate your mortgage payment formula
The base mortgage payment covers only principal and interest. The standard formula is:
Monthly Payment = P × [ r(1 + r)^n ] / [ (1 + r)^n – 1 ]- P = principal loan amount
- r = monthly interest rate (annual ÷ 12)
- n = number of payments (years × 12)
2. Add taxes and insurance
Your total payment usually includes property taxes and homeowner’s insurance. Lenders divide these yearly costs by 12 and include them with principal and interest.
3. Factor in PMI or MIP insurance
When your down payment is under 20%, lenders may charge PMI (private mortgage insurance) or MIP for FHA loans. It’s typically 0.5–1% of the loan per year, divided into monthly payments.
4. Use our Mortgage Calculator
Skip the math! Try the Mortgage Calculator Quick tool to instantly compute your total mortgage payment, including PMI and taxes. Choose your state to preload local property tax rates.
Open the Mortgage Calculator →
5. Adjust for extra payments
Making extra principal payments shortens your loan term and reduces interest. For example, paying $100 extra per month can save over $35,000 in interest and cut 3 years off a 30-year mortgage.
6. Compare by state for accuracy
Since taxes differ, your monthly total varies. Texas and Illinois have higher property taxes, while Florida and Arizona are lower. See our Closing Costs by State guide for more insight.
| State | Tax Range | Monthly Impact |
|---|---|---|
| Texas | 1.6%–2.0% | +$350–$450/mo |
| Florida | 0.9%–1.2% | +$220–$280/mo |
| Illinois | 2.0%–2.3% | +$400–$500/mo |
| Arizona | 0.6%–0.8% | +$150–$200/mo |
7. Verify your numbers with lenders
Always confirm with your lender using a Loan Estimate. It lists your interest rate, insurance, and fees to ensure accuracy. For official consumer guidance, visit CFPB mortgage resources.