To calculate mortgage interest for U.S. home loans, start with the loan principal, annual interest rate, and loan term. Convert the annual rate to a monthly rate by dividing by 12. Calculate the total number of payments (e.g., 30-year loan = 360 monthly payments). Use the formula:

Monthly Payment (M) = P [r(1+r)^n]/[(1+r)^n-1]

Where P = principal, r = monthly interest rate, n = total payments. Subtract the principal portion of each payment from the remaining balance to determine the interest for subsequent periods. For example, a $300,000 loan at 4% annual interest (0.33% monthly) over 30 years yields a $1,416.35 monthly payment. The first payment’s interest is $300,000 × 0.0033 = $990, with the remainder ($1,416.35

$990 = $426.35) reducing the principal. This process repeats, with interest decreasing each month as the principal shrinks.

This method aligns with the actuarial amortization system mandated by U.S. lenders, ensuring equal monthly payments that cover both principal and interest. Data from the Consumer Financial Protection Bureau (CFPB) shows that 68% of U.S. mortgages are fixed-rate, with average interest rates ranging from 3.5% to 7.5% in 2023, depending on creditworthiness and market conditions. For instance, a $250,000 loan at 6% over 30 years accumulates approximately $186,500 in total interest, per calculations by Bankrate. The Federal Reserve notes that variable-rate mortgages use similar formulas but adjust monthly rates periodically, often leading to lower initial payments but higher long-term costs during rate hikes. The complexity of mortgage interest calculation underscores the importance of mortgage calculators and professional advice to avoid errors, particularly for refinancing or adjustable-rate loans.