Quick answer: A 1,000,000 home with 20% down at 5% a year over 25 years has a loan of 800,000 and a monthly payment of 4,676.72; total interest over the term is 603,016.
How it's calculated
The loan is the price minus the down payment. The monthly payment uses the standard amortization formula M = P·r ÷ (1 − (1 + r)^−n), where P is the loan, r is the annual rate divided by 12 and n is the number of months.
Each payment first covers that month's interest on the remaining balance; the rest reduces the balance. That is why early years are mostly interest and later years mostly principal, as the schedule shows.
Islamic home finance (Murabaha, Ijara) quotes a profit rate instead of interest; for a fixed rate, the monthly payment is calculated the same way. Compare offers by their APR, which includes fees.
Worked examples
- 1,000,000 price, 20% down, 5%, 25 years: P = 800,000 → M = 4,676.72
- Same loan over 20 years: M = 5,279.65, total interest 467,116
Frequently asked questions
Does the payment include insurance and fees?
No. It is principal and interest only. Add property and life insurance, valuation and admin fees from your lender's offer.
How much can I borrow?
Lenders cap the loan by your income and the property value. In the UAE and Saudi Arabia central-bank rules limit the loan-to-value ratio and the share of salary that can go to repayments; ask your bank for its exact limits.
Is this the same for Islamic finance?
For a fixed profit rate the monthly payment is calculated the same way. Variable-rate products change the payment when the rate resets.
How does the term change the payment?
A longer term lowers the payment but raises the total interest considerably. Try both to find a payment you can live with.
How much down payment do I need?
It depends on the country, the buyer and the property. See the down payment calculator for Saudi and UAE minimums.
What happens if I pay extra each month?
You finish sooner and pay less interest. Use the mortgage payoff calculator to see how many years it saves.