Why is my lender’s payment a few cents different?

Servicers may round at different steps or use slightly different day-count conventions. Small differences near the last payment are normal.

Does the rate I enter include lender fees?

The note rate is not the same as APR. APR includes certain fees. This site uses the interest rate you enter for payment math.

How Mortgage Payments Are Calculated

Monthly P&I comes from loan amount, rate, and term using the standard amortizing formula. Taxes, insurance, and PMI are added separately.

Published August 28, 2026

A standard fixed-rate mortgage payment is built from three numbers: loan amount, annual interest rate, and loan term in months. The result is a level monthly payment that pays off the loan by the end of the term — assuming you make every payment on time and do not prepay.

M = P × [r(1+r)^n] / [(1+r)^n − 1]

P is principal (loan amount). r is the monthly interest rate (annual rate ÷ 12 ÷ 100). n is the number of monthly payments. M is your monthly principal and interest.

What this formula does not include

Property taxes, homeowners insurance, PMI, and HOA fees are separate from principal and interest. Lenders often collect them through escrow, so your total monthly housing bill can be higher than M alone. See what PITI means.

Zero-interest edge case

At 0% interest, the payment is simply loan amount divided by number of payments — equal principal chunks with no interest charge. Our calculators handle that case explicitly.

Full formula details and rounding rules are on the methodology page.

Calculators for this topic

Mortgage Payment Calculator — Quickly calculate your monthly principal and interest payment for any loan amount, rate, and term.
Mortgage Calculator — Calculate your estimated monthly mortgage payment including principal, interest, taxes, insurance, PMI, and HOA fees.
Amortization Calculator — View a full amortization schedule showing every payment, principal, interest, and remaining balance.

Frequently Asked Questions

: Servicers may round at different steps or use slightly different day-count conventions. Small differences near the last payment are normal.
: The note rate is not the same as APR. APR includes certain fees. This site uses the interest rate you enter for payment math.

Sources

Consumer Financial Protection Bureau: How to compare mortgage offers

Educational information only — not financial, legal, or tax advice. Financial disclaimer.