How is my monthly mortgage payment calculated?

A monthly mortgage payment is calculated from the loan amount, interest rate and loan term, then combined with the portion of annual property taxes and homeowners insurance the lender collects and holds in escrow. Principal and interest stay fixed on a standard fixed-rate loan, while the tax and insurance portion can change year to year as assessments and premiums change. Private mortgage insurance, where required, adds an additional monthly cost until enough equity is built up. A lender can break down each of these pieces for a specific loan scenario rather than a general estimate.