$400,000 Mortgage at 6.5% for 30 Years

The monthly payment uses the standard amortization formula: M = P[r(1+r)^n]/[(1+r)^n-1], where P is the loan amount ($400,000), r is the monthly interest rate (6.5%/12 = 0.54%), and n is the total number of payments (360). This gives a fixed monthly payment of $2,528.27.

This calculation shows principal and interest only (P&I). Your actual monthly housing cost will also include property taxes, homeowner's insurance, and possibly PMI (private mortgage insurance if your down payment is less than 20%). These can add $200-$800+ per month depending on location.

In the early years of your mortgage, most of your payment goes to interest. For this 30-year mortgage at 6.5%, about 85.7% of your first payment is interest. This ratio gradually shifts until the final years when most of each payment goes to principal.

A 15-year mortgage has higher monthly payments but a much lower total interest cost. A 30-year mortgage has lower monthly payments, giving you more cash flow flexibility. The best choice depends on your budget, other financial goals, and how long you plan to stay in the home.