There are several "factors" that determine what your Mortgage Monthly Payment is going to be:
    
     1. If you got an "Interest Only" or Regular Mortgage
     2. If you are paying "Private Mortgage Insurance"
     3. If you are making "Escrow" payments.
         
Some of these factors you have control over and some you do not. Lets look at each of them.
    
Monthly Payment Factors:

Interest Only - If you take out an "Interest Only" loan than your monthly payments do not include any repayment of principal. This reduces your payments but does not help you build up any equity in your home since you will still owe the entire principal amount of the loan at maturity or when you sell the home or refinance it. Borrowers who feel they will only be in the home a shorter time and those that feel they can refinance the loan later when interest rates go down or when they start earning more income, use the interest only loans to keep their monthly payments lower.
    
"Private Mortgage Insurance" ("PMI") - Many lenders will require you to take out "Private Mortgage Insurance" know as "PMI" . This insurance pays off the lender if you default before the loan is repaid. Some lenders will insist on PMI if they feel your may be a little more credit risk or if you do not make a down payment of at least 20% of the cost of the home. Many borrowers who do not have enough available cash to make a down payment equal to 20% of the purchase price of the home often feel that they need to settle for a less expensive home. As example, if a potential home buyer has only $20,000 in cash for a down payment, he may feel restricted to a $100,000 home. However, if that home buyer were to agree to taking out "PMI", he may be able to afford a $200,000 to $300,000 home with his $20,000 down payment. This is because the "PMI" will pay off the loan if the borrower defaults allowing the lender to loan the borrower the larger amount with only the $20,000 down payment. The annual premium varies between .5% to 1% of the principal amount of the loan and can add $40 to $100 to your monthly payment per $100,000 loan amount. Most lenders will allow you to cancel the PMI after the principal amount of you loan is reduced to a certain amount, usually 80% of the original principal of the loan.
    
"Escrow" - Since it is your responsibilitiy to take out homeowners insurance on your property and flood insurnace where required as well as pay the annual real estate taxes, many lenders require you to pay 1/12th of the annual cost of each into an "escrow" account at the lender. This assures the lender that the insurance premiums are kept up to date and that the real estate taxes are paid on time...since the funds will be accumulating in your "escrow" account and paid out by the lender when the bills are due. The lender will have you list him as the beneficiary of the insurance and the bills be sent to him. And the governmental agency that collects the real estate tax on your property will also send the statements to your lender for payment. In some cases, if the lender is conveinced you are credit worthly enough, he will forgo the "escrow" account and let you take care of making the insurance and real estate taxes on your own.
     
Breaking Down Your Monthly Payment:
    
A. Normal Principal & Interest Mortgage with a $100,000 Amount -
    6% Fixed Interest Rate for 30 Years
  

    
As you can see from this table of your monthly P&I payment, the early payments are mostly (83%) interest until you get to the payments in the 20th. year which become more principal (55%) than interest. This 6% 30 year loan actually cost us $115,560 in interest plus the $100,000 principal for a total of $215,560. [We simplified the last payment for the sake of uniformaty. The actual payment is only $1.60 of which $1.59 is principal].
        

B. Same $100,000 loan amount - same 6% interest rate for 39 years
    but add P&I and Escrow
    

    
C. $500,000 loan amount - same 6% interest rate for 39 years
    but add P&I and Escrow
    

    
D. $1,000,000 loan amount - same 6% interest rate for 39 years
    but add P&I and Escrow
    

    
Monthly Payments at Different Interet Rates (Per $1,000 Princiapal Amount)
    
We have listed the payments for mortgages with 10 year, 15 year, 30 year and 40 year terms.